With so many businesses operating in multicloud environments, we ask the question is the cloud providers’ market share in 2019 relevant anymore? The answer is probably not, although comparing the 2019 cloud providers market share with previous years will likely spark some interesting discussions.
Each quarter, cloud industry analysts work themselves up into a sweat when cloud service providers release their revenue figures. Thankfully for analysts, AWS is the only cloud service provider to present its figures in a format that clearly defines its revenues from cloud computing. Nonetheless, analysts like to calculate which provider has the largest market share and how it has increased/decreased from the last quarter.
Unfortunately, because of the way most cloud service providers release revenue details, the cloud providers market share in 2019 is no more than an educated guess. Whereas some analysts isolate IaaS services to determine market share, other analysts include PaaS services, and/or SaaS services, and/or private cloud services—resulting in different market shares for the same figures.
While each industry analyst provides a different perspective of how much market share each cloud provider owns in 2019, AWS is the only provider to offer specific revenue from cloud services. To some, the question is are the cloud providers’ market share in 2019 relevant anymore?
Does the cloud providers’ market share matter when everybody is going multicloud?
One argument for analyzing cloud providers’ market share is that the bigger share a cloud provider commands, the more scalable their services are and the wider range of services they can offer. According to Gartner: “Only those providers who invest capital expenditure in building out data centers at scale across multiple regions will succeed and continue to capture market share”.
This makes you wonder if scalability and the range of services offered by a single cloud service provider matter to businesses anymore. Operating in a multicloud environment gives businesses practically infinite scalability, and while some Azure services are certainly more suited to businesses with legacy on-premises systems supplied by Microsoft, it certainly doesn’t seem to have prevented these businesses taking advantage of services offered by other cloud service providers.
Why figures for cloud provider market share in 2019 might be inaccurate
Something quite remarkable happened last year. According to Gartner’s revenue-based analysis of the IaaS public cloud service market share, AWS’ slice of the pie shrank. Naturally, it couldn’t have continued growing indefinitely at rates in excess of 10% per year, but when analysts produce figures for the cloud provider market share in 2019, their numbers shrank.
A further loss of market share will likely have some in the industry forecasting the end of AWS, but there’s likely a justifiable reason for AWS’ revenues not increasing as fast as the revenues of other cloud service providers (or at least what we know about them), and that’s optimization. It’s important to remember that AWS was first-to-market, and many of its customers are further along their journeys towards cloud maturity that customers of other cloud service providers.
It’s also the case that many AWS customers have reduced their cloud bills by taking advantage of Convertible Reserved Instances (RIs). Prior to November 2017, when one-year Convertible RIs were introduced, purchasing a Convertible RI wasn’t an option for many businesses because of the three-year term. Since the one-year purchase option was introduced, the number of businesses purchasing Convertible RI’s is almost double the number purchasing Standard RI’s.
No other cloud service provider offers a discount program similar to Convertible RI’s, and what this means in terms of cloud provider market share in 2019 is that AWS customers are likely using more services, but paying less for them. Therefore, although AWS’ revenue-based market share may decline, a utilization-based analysis of market share might see the company further ahead in the market than it appears.