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Four cloud providers pocket almost two-thirds of global cloud infrastructure spend

Written by Thu 4 Feb 2021

Cloud infrastructure spending was up $10bn in Q4

In a year when global cloud infrastructure spending exploded to new heights, four major cloud providers tightened their grip on business technology’s most lucrative market.

Market analysts Canalys have crunched the latest cloud numbers following this week’s quarterly earnings reports. Its figures show that 65 percent of all the money spent on cloud infrastructure last quarter went to AWS, Microsoft, Google and Alibaba.

The record-breaking quarter saw a $3bn increase in spend and a total injection of $39.9bn into Infrastructure-as-a-Service and Platform-as-a-Service, as companies opened up budgets to cloud technologies in response to Covid-19.

This investment took total annual spend to an eye-watering $142bn – $35bn more than customers dropped on cloud infrastructure in 2019.

“The rate of digitalization, led by cloud, is gathering pace. Companies are now more confident about releasing budgets for business transformation,” said Canalys Research Analyst Blake Murray.

“Large projects that were postponed earlier in the year are being re-prioritized, led by application modernization, SAP migrations and workplace transformation.”

“Healthcare, financial services and pharmaceuticals are among the industries leading the way, but even those under most pressure are diverting investments to cloud, opening up new revenue streams and diversifying business models.”

AWS

News this week that AWS chief Andy Jassy is to replace Jeff Bezos as CEO of Amazon came as somewhat of a surprise. The news that AWS still leads the cloud market provided no such shock.

Amazon’s cloud accounted for 31 percent of spend last quarter and grew cloud sales by 27 percent to a cool $12.37bn.

Canalys noted that AWS enjoyed a ‘resurgence’ in customer investment following a sluggish Q3, referencing new contract commitments with JP Morgan, Arm, BMW, Twitter and others.

In order to sustain momentum, AWS is expanding in its channel partner ecosystem to recruit more companies to its cloud. EU reseller Computacenter is now selling an AWS onboarding service, while Orange Business Services signed a ‘strategic partnership’ to support enterprises worldwide with AWS adoption.

“We continue to see companies meaningfully growing their plans to move to AWS,” said Amazon CFO Brian Lolwsky on a conference call.

Azure

Azure remains AWS’s biggest threat, after Microsoft’s cloud posted a solid 50 percent growth, inching it to 20 percent share of the global cloud services market.

The previous quarter Azure grew 48 percent, and analysts expected 40 percent growth in Q4, reports Visible Alpha.

In total, customers dropped $7.98 billon on Azure in Q$, with Canalys citing healthy Teams and 365 adoption as key drivers.

“This was really driven by continued customer demand, with stronger-than-expected consumption as customers have increased their focus on digital transformation,” Microsoft CFO Amy Hood told Reuters in an interview.

Google

Alphabet CEO Sundar Pichai was unphased at the news his cloud division posted a loss of $5.6bn last year, and given Google Cloud Platform’s rising revenues, his calmness might be justified.

Google’s share of cloud infrastructure spend in Q4 was 7 percent after it reported the fastest revenue growth – 58 percent – of the three cloud market leaders. Time will tell whether the money Pichai has ploughed into Google’s multi-cloud and verticalised strategy will pay dividends. Google’s CFO also cited data centre and server investment as key factors behind Google’s cloud losses.

“Although increases in backlog do not directly correlate to revenue trends, the growth in backlog demonstrates the success Google Cloud is having with large enterprises, which are signing meaningful long-term commitment agreements,” Pichai said.

Alibaba

APAC cloud leader Alibaba grew 54 percent in Q4 2020 taking its share of the total market to 6 percent.

“[Alibaba] updated its hybrid cloud strategy during the quarter, with the launch of its Hybrid Cloud Partner Program and on-premises appliances targeting small and medium-sized businesses,” said Canalysis.

“The program will enable partners to plan, design and resell Alibaba Cloud services with free licenses and unlimited CPU cores.”

Written by Thu 4 Feb 2021

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