Infrastructure as a Service (IaaS), works. Amazon Web Services Inc.’s most recent quarterly financial results report shows that the cloud company is doing well with it, at the least temporarily, as it continues to resist stiff competition from some the largest companies in the world. What now?
“Amazon’s public disclosure of AWS’ revenue metrics and operating metrics gives market long-awaited information around the public cloud IaaS industry,” stated analyst Meaghan McGrath from Technology Business Research Inc. in an announcement.
Amazon released AWS numbers for the first-time in its quarterly financial earnings report. This showed that the cloud division is indeed profitable, exceeding many analysts’ expectations. Jeff Bezos, Amazon.com CEO, stated that Amazon Web Services is a $5 Billion business and is still growing fast. In fact, it’s accelerating.”
[Click on the image to see a larger view.] Cloud Infrastructure Services Revenue Growth (IaaS and PaaS), Private and Hybrid Services. (Source: Synergy Research Group) “There has been much skepticism in the market around the viability of cloud models as many of the largest publicly traded [Software-as-a-Service] SaaS vendors such as Salesforce and Workday have negative operating margins year after year,” McGrath said. Further, IaaS charges on a per-use basis (whereas SaaS requires a subscription), making the business model even more risky. The market can be assured that there is profit in cloud computing and that successful vendors and business models will continue to exist with the [AWS] announcement.”
AWS will remain at the top of the list for the market, at least for the moment.
Synergy Research Group said yesterday that AWS is still larger than its four main competitors in the cloud infrastructure market. However, other competitors are frantically trying to grab a piece of the cloud pie.
Synergy stated that Microsoft can once more claim to have the highest revenue growth rate and IBM is still the king of private and hybrid services. However, AWS continues its rapid growth and its market share climbed to 29 percent in the third quarter. Although Google is slowly gaining market share, it is still only half the size of Microsoft in the market. Salesforce, which was once the undisputed leader in [Platform as a Service] PaaS has rounded out the top five ranked businesses. Synergy reported in February that AWS market share was at its highest level in five years.
Analysts expect aggressive business moves by the company to continue in the future, including price matching with competitors, constant innovation, and new products and services.
McGrath pointed out several recent business moves, including the launch of WorkMail managed email and calendar, unlimited Cloud Drive storage, and the Amazon WorkSpaces Application Manager (Amazon WAM), which allows companies to manage their own apps as well as those purchased from the AWS Marketplace for Desktop Applications. These announcements indicate that AWS will continue expanding its enterprise application suite to compete with productivity suites like Google’s, she said.
Amazon Machine Learning was also introduced to compete with Microsoft Azure Machine Learning and IBM Watson Analytics. According to the Technology Business Research analyst, “TBR expects that this solution will be enhanced with additional analytics offerings in 2015, to create more comprehensive, managed Big Data Solutions.”
Synergy pointed out that there was plenty of growth in the cloud market, particularly in the IaaS segment dominated by AWS. AWS is still miles ahead of its competitors in cloud infrastructure on a strict like for like basis.