A recent study of Synergy Research indicates a trend towards a possible oligopoly in the Cloud Services Providers’ Market. Data from Synergy Research reveals that Amazon Web Services (AWS), Microsoft, IBM and Google in cloud infrastructure space account for more than half of the global market. The total market share of the ‘big four’ is about 54% of the overall cloud infrastructure market, the consolidation seems to be increasing year on year. In Q2 of 2014 and Q2 of 2013, the total market share of the four companies was 46% and 41% respectively. The quarterly figures for revenue of the four giants have surpassed $3 billion for the first time. The overall market consists of various service options for cloud computing. These are Infrastructure as a Service (IaaS), Platform as a Service ( PaaS), Software as a Service ( SaaS) and consist of private, public and hybrid clouds. The overall market size is approaching $6 billion for the Cloud.
Since the remaining market seems to be left behind and this could be a trend for the future, it may sound worrying for the smaller players. None of the other companies have been able to garner market share in terms of data center infrastructure, worldwide presence and marketability as the Big Four have achieved. However, there still seems to be lot of opportunities for growth of these companies as the overall market size is growing rapidly.
Amazon Web Services clearly is the market leader, dominating the cloud infrastructure space, however, Microsoft with its Azure platform has moved into the second spot. AWS is an “on-demand” platform and does not seem to have an option for “on-premises” deployment for cloud. AWS provides for servers with storage and standard Operating Systems, and any code can be run on Amazon Machine Image (AMI), which could be run in a physical server having the same OS.
While Amazon is more driven from providing Infrastructure and Services around varied platforms, Microsoft focuses on “Software-plus-Service”, which would mean that they support parts of application shared between in house and Azure infrastructures. Microsoft’s focus is usage of its own platform, i.e of Azure and does not provide support for other Operating Systems. Understandably, .NET users would find it easy to use Azure, while Microsoft would continue building portability among its own applications.
Google users are provided with an Open Source Development Kit (OSDK), however, the Google specific APIs are in the Python scripting language. Due to the uniqueness of Python language and the Big Table-based data architecture in Google, portability is not an option for Google users. As such Google Cloud Platform provides support for Platform as a Service, a virtualized environment with SQL and NoSQL databases, Big Data Solutions and Application Services with Object storage. Developers are able to develop the App Engine apps and test them on their own systems before deploying them to Google’s cloud. So, Google does not offer the flexibility to have “on premise” implementations.
IBM Cloud provides a cloud computing infrastructure which is open and flexible. It offers public, private and hybrid clouds and offers IaaS, PaaS and SaaS services based on the customer needs.
The Cloud Infrastructure currently being set providers usually have about 40 to 60 % of the infrastructure sitting idle and the cost for this part of the investment is not monetized. This wastage of space has made immense CAPEX pressure on service providers, and in turn they are unable to compete with the larger hosting companies who have the financial muscle to absorb this as part of their investment.
Last week in London, in a Cloud Forum, Mongo DB VP Strategy, Kelly Stirman shared five directions in which the Cloud industry is transforming:
- Embrace failure and adopting a more iterative project development lifecycle. Since the cycle times for implementations are very less, there are too many chances of failure on cloud.
- Do not use Cloud to port any application, if the application can fail on your local because of issues like performance issues, it may fail in the Cloud as well. So, IT needs to be used appropriately to resolve issues in local before they are moved onto Cloud. Today Amazon does releases in minutes and does not wait for a many months before a release which is being done by lot of companies.
- Avoid vendor lockin and proprietary technologies as much on the Cloud.
- Security in the Cloud is much higher than the security that our local applications can attain.
- The last direction is the most controversial. As per Stirman, there will remain only three Infrastructure as a Space ( IaaS) providers on Cloud – Amazon, Google and Microsoft. The other companies are likely to run out of money.
So, does this mean the end of smaller cloud providers? As per Ditlev Bredahl, CEO of OnApp, this may not be the case. There is a huge number of cloud providers in this world, and one way they could survive is possibly by collaboration and sharing of the 40% to 60% space. Sharing infrastructure would give the smaller cloud providers access to global space without any significant investment or CAPEX. This would also enable over– utilization of local cloud infrastructure, while having an access to cloud services across the world.
So, is the future going to be only for the ‘Big Four’ or the ‘Big Three’, or the smaller players can rise to the challenge? What do you feel?