Last week, Amazon reported their second quarter revenue results, and with it came a new record of $2.9 billion in Amazon Web Services revenue - a 58% increase from the first quarter. The growth exceeded Wall Street expectations as AWS continues to back up its market leader status over close cloud rivals, Microsoft and Google. Google's parent company, Alphabet, posted second quarter results last week as well, reporting a 21% revenue increase over the previous twelve months. Google's revenue report included $2.2 billion for "Other Revenues" - which is where Google's Cloud Platform is categorized. However, Google (or properly Alphabet) does not further break down the financials in order to detail exactly how much of that relates to Google's Cloud Platform - as it also includes revenue from Google Play and Google Apps, among others. Similarly, Microsoft doesn't disclose revenue related to Azure. However, they reported an annual run rate of $10 billion and set expectations for that number to grow to $20 billion by 2018.
So, what does all this mean for you as AWS and their competition reap the rewards?
I think there are two areas for which everyone wins as cloud provider revenues grow:
Maturation of the Cloud
The continued, rapid (almost massive) growth of cloud computing showcases the value that the cloud and its related services has for companies is maturing. Companies are moving from "if" cloud to "when" cloud. Recent announcements of Salesforce moving to AWS, GE and Boeing's partnership with Azure, and Home Depot shifting data to Google proves top companies are committed to the cloud as a foundation for existing and new lines of business. As a result, cross-cloud provider standards and best practices are emerging. Also, security and data control concerns are easing, as a recent 2016 State of Cloud Report conducted by RightScale, for the first time, had security surpassed by lack of resource expertise as the #1 cloud challenge. All of this demonstrates that cloud is here to stay.
Cloud Wars Continue
When companies compete, customers win. Microsoft and Google will continue to be bullish on chipping away at any market share they can grab from Amazon. This means costs of services will be driven lower for the customer. Cloud cost management will remain a vital focus for companies to optimize as they search to stretch every penny within multiple cloud offerings. As multi-cloud vendor strategies now shift into execution phases, the competition between cloud providers will push new innovative services and capabilities in the effort of attracting new customers. Additional focus on areas of IoT, Big Data, Machine Learning, Serverless Architectures, and more will continue to expand the possibilities of cloud solutions, passing that innovation onto the customer to achieve competitive advantage. Current innovations in artificial intelligence (i.e., Amazon's Alexa or Microsoft's Cortana) and augmented reality set the stage for the next big wave of industry trends.
The first half of 2016 has provided us with a sneak peek into the levels of growth we never thought were imaginable. It will be interesting to see how the year finishes out. I think we'll continue to see record growth, which should translate to more value passed to the customers.
About the Author
Adam is a Manager based out of CapTech's Richmond office with expertise in cloud computing and web content management platforms. He holds a unique ability for aligning technology solutions with business goals skilled in strategy, project management, as well as architecting and implementing enterprise solutions. Adam has a passion for knowledge sharing and growing the technology community as a conference speaker, president of user groups, and recognition as a Top 50 SharePoint blogger.