Dive Brief:

• The three cloud giants reported financial earnings Thursday, marking another quarter of consistent cloud growth for Amazon Web Services, Microsoft and Google. Microsoft's revenue in the Intelligent Cloud increased 14% year-over-year to $6.9 billion in Q1 FY18, driven by Azure revenue, which boasted 90% year-over-year growth. But the big news for Microsoft was its commercial cloud reached an annualized revenue run rate of $20.4 billion, a milestone the company had set as a goal in 2015 to reach by the end of FY18, reports Business Insider.
• Meanwhile, AWS reported strong earnings Thursday, bringing in $4.6 billion in Q3 revenue, up 42% year-over-year. With Q1 and Q2 revenues of $3.66 billion and $4.10 billion, respectively, AWS could reach $18 billion in revenue this year, Business Insider reports. AWS had an operating income of $1.17 billion, which helps Amazon remain profitable as its international segment operates at a heavy loss, with an operating income loss of $936 million in Q3. Its North America segment had a relatively flat operating income of $112 million this quarter.
• Google's parent company Alphabet does not break Google Cloud into its own reporting segment, instead wrapping it into "other," which makes it difficult to see how its cloud segment is performing on its own. But Ruth Porat, CFO of Alphabet, did highlight that the "other" segment performance — which includes cloud, apps and hardware — was up 40% year-over-year, bringing in $3.4 billion in revenue. 

Dive Insight:

Continuing a trend: cloud revenue is up, the number of services are increasing and AWS still dominates the sector.

Following Q3 earnings, Synergy Research Group estimates that the cloud market is now worth $12 billion — including IaaS, PaaS and private cloud services — and is projected to grow more than 40% year-over-year in 2017. While the market leaders maintain a global footprint, they still don't have as much of a presence in China, where Alibaba dominates. Even as other other cloud offerings have reached market maturity, companies like Microsoft and Google have portfolios that pale in comparison to AWS. 

IBM also has a robust cloud portfolio, which accounted for 8% of the cloud market share in Q2, with a particular niche in hosted private cloud services. But Big Blue falls behind AWS, Microsoft and Google in Gartner's Magic Quadrant.

So what's going to be the true differentiator in the cloud market? Services and partnerships. To remain competitive, each cloud leader has to offer at the very least what its competitors offer. Or even better, a cloud leader should offer a service its competitors can't.

The cloud market recently saw a slew of new services and partnerships. Some were more surprising than others, such as AWS' partnership with Microsoft on an open AI ecosystem, which emphasizes Microsoft's push for interoperability. Google is also teaming with Cisco to grow hybrid cloud services across both organizations' platforms. 

Other services, however, are difficult for competitors to match. 

For example, AWS rolled out per second billing in Q3, outpacing Microsoft and Google, which both offer per minute billing. The cloud giant also alerts its customers when they have low cloud utilization, costing AWS as much as $500 million per year. But putting it in context, AWS is well on its way toward an $18 billion year in the cloud.