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Report sheds light on AWS cloud market share mystery

Cloud market share is a tricky thing to calculate, but one firm has cobbled together data to solve the riddle and define Amazon's lead.

Calculating cloud market share will remain a nebulous activity until Amazon reports its AWS revenues, but one research firm claims to have the numbers nailed down.

The market will know much more about Amazon Web Services' (AWS) revenues next quarter, when Amazon breaks them out separately in its financial reporting for the first time.

In the absence of these numbers, Synergy Research Group (SRG), based in Reno, Nev., has compiled cloud provider revenue data from quarterly survey results, existing financial and earnings releases, analyst briefings from the companies, investor data, product data and other secondary data sources to come up with market share data, according to John Dinsdale, chief analyst and managing director of SRG.

AWS' cloud growth faltered in competition with Microsoft and IBM in the second quarter of 2014, according to SRG's report, Microsoft and IBM Chase Amazon while Google Falls Off the Pace. AWS remains in a league of its own in terms of scale, but can no longer claim to be bigger than its closest four competitors combined, according to the report; its year-over-year growth rate dropped in that quarter to 49%.

This was in contrast to an estimated 67% year-over-year growth for the first quarter of 2014, in which Amazon held 28% of the market, according to SRG. Its growth rebounded in the third quarter, bumping its market share back up to 27% from 26% in the second quarter, and in the fourth quarter it grew 51% year over year. SRG pegs its market share at 30%, the highest in five years.

'Based on growth rates, Azure could even catch up to AWS in revenue within the next 12 to 18 months.'
Stu Minimananalyst with Wikibon

The fourth quarter of 2014 brought several new products from Amazon, including the Aurora database, Lambda cloud provisioning product, AWS Key Management Service and AWS Config. New high-end C4 instances became generally available last week.

In the third quarter, Microsoft's cloud revenue grew the fastest of the major cloud service providers, at 136% growth year on year, resulting in more than a 10% share of the market, according to SRG. This growth slowed to 96% in the fourth quarter, but Microsoft retained its No. 2 spot behind AWS with just over 10% of the market.

The third and fourth spots in the market share rankings by SRG have been the territory of IBM and Google. For the fourth quarter, IBM ranked third with an estimated 7% market share, while Google was fourth at an estimated 5% market share. In previous quarters, Google's growth was 47% over the previous year's second quarter. By the third quarter, this growth recovered to slightly more than 80% year over year, and 81% for the fourth quarter. Rackspace brought up the rear with an estimated 3% market share.

AWS cloud market share debatable

A caveat: SRG's numbers put together what are often seen as disparate categories for infrastructure as a service (IaaS) and platform as a service (PaaS), some market researchers said. Salesforce.com, for example, is ranked in SRG's numbers above Rackspace at an estimated 4% market share, despite the fact that overall offerings from these two vendors could not be more different. However, only Salesforce's PaaS numbers are included in the estimates, which exclude the bulk of Salesforce's revenues, Dinsdale said.

Another analyst pointed out that Amazon's revenues are somewhere in the neighborhood of $3 billion, while Rackspace came in at about $450 million, which doesn't seem proportionate to the market share results, but Dinsdale said his study includes only revenues that pertain to its cloud infrastructure services, and excludes revenue that may be branded as "cloud" but isn't really, such as managed hosting services.

SRG estimated that quarterly cloud infrastructure service revenues, including IaaS, PaaS and private and hybrid cloud but excluding SaaS, are now approaching $5 billion, with trailing 12-month revenues exceeding $16 billion. 

Other clues about cloud market share can be found in a 2014 developer survey from Forrester Research which showed the same general ranking of vendors as SRG when it asked 427 IT pros to name the cloud provider they currently use most often. AWS was on top with 24% of the responses; Azure second with 15%; IBM third with 12% and Google fourth with 11%, though many respondents said they use more than one platform, according to James Staten, analyst with the firm, based in Cambridge, Mass. 

Another report from Wikibon.org prepared this quarter asked some 300 IT pros who use or are considering using cloud services which vendor they considered the primary one for applications such as email and business intelligence. AWS was popular for test and development with 24% of respondents choosing it, while 29% said they use Google for email. Microsoft Azure, however, had the highest across the board rating for all applications, for an average of 29% of overall mind share, and even edged AWS in test and development with 27% of respondents.

"Microsoft Azure is moving fast into the enterprise marketplace," said Stu Miniman, analyst with Wikibon, based in Marlborough, Mass. "Based on growth rates, Azure could even catch up to AWS in revenue within the next 12 to 18 months."

Beth Pariseau is senior news writer for SearchAWS. Write to her at [email protected] or follow @PariseauTT on Twitter.  

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