Cloud Market Continues to Grow; Big Four Take Market Share; Opportunities for Cloud Providers

Based on the Q1 Synergy Research Group data for cloud infrastructure services, Amazon's (AMZN) Amazon Web Service (AWS) is still the 800 lbs gorilla at 31% market share, followed by the other three (of big four) - Microsoft (MSFT), IBM (IBM) and Google (GOOG) - in aggregate at 22% of the market. Both Microsoft and Google showed growth over 100%.  The overall market grew over 50% - that is the good news. 

 

The cloud infrastructure service revenue comprised of (as expected) IaaS, PaaS, private and hybrid cloud exceeded the $7 billion mark in Q1. This is a significant milestone and shows healthy growth of the overall cloud infrastructure market.

The next 20 top-ranked cloud providers showed a healthy revenue growth of ~ 41%  and collectively accounting for 27% of market share.  While the Big Four continue to gain market share, it is important for the (other) cloud providers to not focus only on revenue growth but also keep a close eye on the undercurrent of the market share.  

The cloud providers need to build business sustainability through differentiation. Their strategy should consider multiple approaches including, industry vertical solutions, regional focus (today US market is ~ 50% of global market), create value-added services and bundling of services. Such approaches will create customer loyalty, reduce churn and guard against continued pressure to drop cloud infrastructure prices.