Dive Brief:
- The Infrastructure as a Service (IaaS) market expanded by 31% to a $22.1 billion worth in 2016, an increase of $5.3 billion from 2015, according to a Gartner report. Amazon still dominates the market with 44.2% followed by Microsoft with 7.1% and Alibaba with 3%.
- Gartner predicts Amazon will face "growth erosion" with the steady year-over-year revenue growth of its competitors. Microsoft had a 2015-2016 revenue growth of 61.1% compared to Amazon's 45.9% growth. Alibaba grew 126.5% and Google 100%.
- Alibaba continues to grow in the service global market, and last year it announced data centers for Europe, Australia, the Middle East and Japan, according to the report. Alibaba jumped from $298 million in revenue in 2015 to $675 million in 2016.
Dive Insight:
The Platform as a Service and Software as a Service markets continue to grow with cloud-based modernizations, forcing IaaS models to develop cloud-centered offerings. Many companies are developing hybrid-cloud approaches to aid companies in the transition phase of cloud adoption as fully departing from traditional onsite hardware can be difficult.
Still, market domination comes from over-involvement. Amazon retains its lead by having a hand in several services including cloud-native startups, small to medium-sized businesses exploring migration options and larger enterprises in the process of digital transformation, according to Gartner.
However, Alibaba continues to show steady growth as its Q1 revenue for cloud computing grew 96% year-over-year with about one million customers in the health, finance, manufacturing and retail industries. Microsoft Azure saw similar growth at 97% year-over-year for Q2, but AWS stayed below 50% year-over-year growth in the same timeframe.
Amazon's lead can be credited to its status as an original cloud provider, but legacy may not be the only thing that can maintain its lead. Success is found in a provider's ability to ease migration and services for the enterprise.
