ra2 studio - Fotolia

AWS vs Google vs Microsoft: How the enterprise cloud war is hotting up

With Amazon, Google and Microsoft all reporting strong growth on the back of cloud, we take a closer look at how they have achieved it

This article can also be found in the Premium Editorial Download: Computer Weekly: Will Rio’s 4G networks sink or swim?

The grip that Amazon Web Services (AWS) has on the infrastructure-as-a-service (IaaS) market can make it hard for even relatively big players to get a look-in when enterprise CIOs shop around for cloud services.

Microsoft has managed to hold its own, with the help of its Azure platform, by focusing on convincing its existing base of on-premise enterprise customers to ditch their own servers and use its cloud infrastructure.

It is a strategy that appears to be working very well for Microsoft. Its fourth-quarter 2016 financial results saw the Azure cloud division emerge as one of the company’s best-performing business initiatives, with revenue growth of 102%.

In recent years, the company has also publicly committed to matching AWS on price for various commodity cloud services, which has been a useful marketing tactic.

For instance, every time Amazon decides to publicly announce a price cut for any of its cloud infrastructure services, Microsoft grabs the opportunity to crowbar its way into that narrative and announce a price cut of its own.

This has helped to create the impression that the IaaS market is something of a two-horse race between AWS and Microsoft, which is an image Google has been working hard to dispel since late 2015 when it appointed former VMware co-founder, Diane Greene.

A Google board member since 2012, Greene was appointed to oversee the running of Google’s newly-converged cloud services business, bringing the product, engineering, sales and marketing efforts of its off-premise infrastructure and software initiatives under one roof for the first time.

Unified approach

The move was comprehensively referenced during a conference call to discuss Alphabet, Google’s parent company, and its 2016 second-quarter results, with CEO Sundar Pichai, who described how taking a more unified approach to cloud was opening doors for it in the enterprise.

“It’s a big set of changes, and it’s obviously having an impact,” said Pichai on the call transcribed by Seeking Alpha.

“So for me, I see a shift to a world-class enterprise approach, and it’s definitely having an impact on the type of conversations we are having and the outcome of the RFPs [requests for proposals] we are engaged in.”

Proof of that is evident in some of the high-profile contract wins Google has secured this year with the likes of music-streaming site Spotify and Apple.

To keep up this momentum, the company outlined the steps it has taken to increase its headcount across several areas of the business, including its cloud division, with more than 2,460 recruits taken on in the previous quarter.

Google vs AWS

At present, Alphabet does not provide a breakdown within its financial results of the cloud’s contribution to its wider business, which banked a profit of $4.9bn against revenues of $21.5bn in Q2.

Instead, it is reported as “other revenue”, which means the performance of Google’s converged cloud unit is muddied because its figures are lumped in with those for Google Play and the company’s hardware ventures.

Even so, this part of its business brought in revenue of $2.2bn, up 33% on the year before.

It is currently unclear just how big Google’s cloud business is, but there is no denying that AWS has the upper hand, based on its financial results, which were released the same day.

The activities of AWS alone brought in $2.9bn in revenue for its parent company, Amazon.com. This figure is 58% higher than that for the same quarter a year ago, and equates to about 9% of Amazon’s total sales.

During a conference call to discuss the results, also transcribed by Seeking Alpha, the senior management team at AWS said the work being done behind the scenes to improve the efficiency of its infrastructure was having a positive impact on its revenue generation.

Datacentre footprint

The company is also currently building out its datacentre footprint across the globe in response to customer concerns about latency, data sovereignty and security, and this looks set to bring a fresh tranche of users on board, it said.

Brian Olsavsky, chief financial officer at Amazon.com, said: “When we expand geographically, existing customers will run more of their workloads on AWS. Sometimes they have local latency concerns or security issues that require them to run things in their country, so that helps.

“We also open up to new customers when we add these regions, and it is certainly an exciting investment for our customer base.”

In view of Google’s and Microsoft’s attempts to become even bigger thorns in the side of AWS, the company is in no danger of overlooking the competitive threat either of these rivals pose to its market-leading position in the cloud.

Read more about the cloud infrastructure market

  • Computer Weekly talks to Google cloud chief Diane Greene about how it intends to win over the enterprise market and give AWS a run for its money.
  • A decade on from the launch of its first cloud service, the UK managing director of Amazon Web Services reflects on its first 10 years in business.

Particularly, as Olsavsky referenced elsewhere during the results call, there is a strong chance that AWS, Google and others will find their services being used by the same customers as enterprises move to adopt a multi-cloud approach in their IT environments.

“We have been in this business longer than anyone,” he said. “Having said that, there is plenty of room for multiple suppliers in this business.

“What we focus on is innovating on behalf of customers and expanding our geographic footprint to make our services more widely available.”

In a briefing note following the recent wave of financial results, Kate Hanaghan, research director at analyst house TechMarketView, said AWS clearly continues to lead the way in the cloud market.

“We know more about the performance of AWS than its competitors,” she said. “Google’s cloud revenue is buried, and while we know Microsoft’s Azure revenue was up 102% in its last quarter, this was from an unknown base.

“Our view is that AWS is growing at a slower rate in the UK specifically. That said, AWS is outpacing the market and most of the other players.”

Read more on Infrastructure-as-a-Service (IaaS)

Data Center
Data Management