Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
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In today’s Cloud Wars Minute, I take a look at how the four hyperscalers are beginning to fall into two separate categories based on growth rates, customer demand, and innovation.
Highlights
00:16 — Four of the companies in the Cloud Wars Top 10 are what have come to be known as the hyperscalers. I believe that those four companies are splitting into two separate groups. We’ve got the sprinters growing at high rates: Microsoft, Google Cloud, and Oracle. And then standing on its own, we’ve got what I’m calling a plodder, and that is AWS.
01:16 — AWS is much larger than both Google Cloud and Oracle. And I’ll point that out. But then I’ll demonstrate why I think that, in spite of that, this is a valid argument that I’m making. First, Microsoft just reported that cloud revenue was up 24% to $33.7 billion. So, even at that size, where Microsoft’s cloud revenue is 40% larger than AWS, Microsoft is growing twice as fast as AWS.
02:07 — AWS numbers don’t come out until late today. So, I am projecting here that if they get the same growth rate for Q4 of 12%, then AWS’s Q4 revenue will be $24 billion. Google Cloud had a terrific quarter with revenue of 25.7% to $9.2 billion. Oracle, a month ago, reported cloud revenue up 25% to $4.8 billion.
03:03 — This notion that it’s impossible to grow at such high growth rates at the size that AWS is demolished by Microsoft’s performance of growing 24% on a much larger revenue base. Customers are voting with their wallets. They’re picking the cloud vendors that they think are going to help them move into the future, not just fulfilling contracts with the ones that they’ve selected in the past.
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03:50 — If we look at the last four quarters for each of those four companies and at the growth rates for each, Microsoft is: 22%, 21%, 24%, 24%. Now, here’s AWS: 16%, 12%, 12%. And then my estimate of 12%, which we’ll find out later today if that’s close to accurate.
04:21 — Google Cloud for the same four quarters: 28%, 28%, 22%, 25.7%. Oracle: 45%, 54%, 30%, 25%. The big bump downward here was when they sort of lapped a year since they had acquired Cerner. So, AWS is the clear “standout.”
05:09 — AWS has been a fantastic company for a long time. It continues to do a great job for its customers, but the others are moving and evolving, transforming more quickly to bring AI, advanced cloud services, and more. They’re doing a better job at that than AWS is, just as in the past, AWS was sort of the king of the infrastructure business.
05:46 — Hyperscalers 2.0 is the new way to look at it. Those four companies are not the same. We’ve got Microsoft, Google Cloud, and Oracle growing rapidly, meeting the customers and helping them take them into the future. Then, you’ve got AWS, which is still locked a bit in its storied past.
