For several years now, tech giants Amazon.com Inc. (ticker: AMZN) and Microsoft Corporation (ticker: MSFT) have enjoyed what may call a duopoly in cloud computing through their Amazon Web Services (AWS) and Microsoft Azure divisions. These two kings of the cloud have been the go-to choices for businesses and individuals seeking to incorporate cloud computing in their operations, even though there is a multitude of other cloud computing providers.
However, it looks like their reign is soon coming to an end, as other companies are entering into the cloud computing space with more products that suit the users, and go head to head in productivity with those of Microsoft and Amazon. Some of these companies that have heightened the competition in the cloud are Alphabet Inc. (ticker: GOOG, GOOGL) through its Google Cloud suite, Oracle Corporation (ticker: ORCL), and International Business Machines Corporation (ticker: IBM). These companies are moving toward leveraging multiple cloud-computing systems at once.
As of August 2021, the cloud computing industry is worth an estimated $396 billion, and as enterprises, government agencies, and individuals keep moving their business operations to the cloud, every major player in the cloud computing industry has a shot at landing big contracts from large enterprises and government departments around the world. The industry has faced little to no lawsuits and antitrust legislation, and it is estimated to be worth as much as $791.48 billion by 2028.
From financial services to retail, to health care, sports industry, entertainment to government agencies, nearly every industry is shifting to what is now known as multi-cloud handling, and providers are more than ready to make big bucks on all these small and large customers.
Clay Magouyrk, Executive Vice President of Oracle Cloud, said that between 75% and 85% of server-side computing is stored on-site, and Tom Keane, Corporate Vice President of Azure Global at Microsoft, said that there is going to be a continuation of moving more stuff to the cloud, according to Market Watch.
According to a study from Gartner, a technology research and consulting company based in Connecticut, about end-user buying behaviour in 2020, 76% of respondents said they use more than one cloud provider. This figure continues to rise as users either don’t want to keep all their data in one place, or just want to have several alternatives for their needs.
The same has been confirmed by Will Grannis, the Managing Director of Google Cloud’s Office of the Chief Technology Officer (CTO), who said that customers have a choice now, which wasn’t the case about four or five years ago when they only had to choose between two options (Microsoft and Amazon).
“A major consideration now is agility in technology. If you stick with one vendor, you are beholden to their technology. As a former CTO, what you want is what is best for customers and they want cloud vendors to provide apps and services that are flexible,” Grannis explained.
At the moment, you cannot ignore the fact that multi-cloud is affecting the kings of cloud computing Microsoft and Amazon to some degree but although other providers are giving these companies some competition, they are unlikely to cause a major shift in the market share, according to Sid Nag, the Vice President in the Technology and Service Provider group at Gartner.
Nag believes that AWS still has its position as the number one provider of cloud computing services to businesses due to the costs involved to remove and replace already existing systems. Microsoft Azure takes the other big chunk of the market and the rest will fight for what will be left after that.
However, as things stand, there is increased competition for the throne as more players join the cloud space, with Oracle, Google, and IBM joining Microsoft and Amazon in the fight for the multibillion-dollar Joint Warfighting Cloud Capability (JWCC) contract being offered by the U.S. Defense Department. Before it was canceled in July 2021, this contract had been exclusively awarded to Microsoft but analysts believe it could just be divided amongst these five major cloud players. The contract was worth $10 billion over a period of 10 years with Microsoft as the sole contractor. Now that the Department of Defense might contract up to five companies for the multi-cloud project, it could cost a whole lot more than $10 billion.
With most of these cloud computing giants posting glittering figures in their earnings reports for the past two years, the COVID-19 pandemic has without a doubt had a hand in this great performance. Cloud computing providers hugely benefited from the shift to digital working as enterprises, government departments, and schools sent employees and students respectively to start working from home via the internet.
Even though the peak of the pandemic has passed, analysts believe companies have woken up and we are going to see more brick and motor companies shift a significant portion of their activities to the cloud as they find the notion of working from anywhere beneficial. Cloud computing providers will not only provide a platform for teams to collaborate on and work simultaneously, but will also act as cybersecurity and storage companies to keep their clients’ data safe, private, but also accessible anywhere, anytime.
Xerox CTO Naresh Shanker said in a note to investors that the way cloud companies optimize and design their business processes and models forces users to seek multiple providers.
This takes away Microsoft’s and Amazon’s duopoly and brings into play other providers like Google, Oracle, and IBM which are also well-established, and already have big clients on their books too.