The world’s three largest cloud vendors by revenue are likely to reach $23 billion in combined Q1 cloud revenue with Microsoft having an excellent chance to hit $10 billion and Amazon’s AWS cloud unit $8 billion along with the $5 billion IBM reported for cloud revenue last week.
Those are enormous numbers. They clearly reflect the voracious and growing appetite for cloud services among large and mid-sized companies in every industry and in every region of the globe.
While there’s no question that almost every one of those businesses will want to run both traditional on-premises systems along with cloud technologies for years to come, the enterprise cloud continues to demonstrate that it is one of the greatest growth markets the tech industry has ever experienced.
And as every major cloud vendor likes to point out, we’re still in the very early days of the market, with 80% or 90% of the available market still unserved.
This week, both Microsoft and Amazon post earnings results on April 24. Here are my predictions:
Microsoft Q1 Cloud Revenue
- The #1 company in my Cloud Wars Top 10 rankings for well over a year continues to execute brilliantly as its commercial-cloud business grows at close to 50%, with Azure revenue-growth coming in at around 75%. Microsoft runs on a fiscal year starting July 1 and ending June 30, so on April 24 will be reporting for its fiscal Q3, ended March 31. In the same quarter a year ago, Microsoft reported commercial-cloud revenue of $6.8 billion. So to hit the $10-billion mark for this year’s Q3, that commercial-cloud revenue will have to grow 47%—an achievement Microsoft has been nailing for several straight quarters.
Amazon Q1 Cloud Revenue
- AWS, in its Q1 a year ago, reported revenue of $5.44 billion. If Andy Jassy’s company continues its remarkable growth rate of close to 50% quarter after quarter, it will reach or exceed $8 billion in quarterly cloud revenue. And consider this: if Amazon, which has held the #2 spot on the Cloud Wars Top 10 list for more than a year, is able to achieve that, $8 billion in Q1 revenue will exceed the total combined revenue from the most-recent quarter for cloud powerhouses Salesforce, SAP and Oracle. Combined.
My rationale for pointing out these big numbers is to underscore just how pervasive and fast-moving the cloud revolution has become. Now, just a few companies are able to post quarterly revenue totaling $23 billion.
For cloud vendors, that means that if you’re not growing at or near the rates that #1 Microsoft and #2 Amazon are growing, then you’d better be offering some highly differentiated services—or you’d better be willing to accept decreasing market share over time.
For business customers, it means cloud vendors are realizing they need to continue delivering ever-rising levels of business value to you to keep or win your business. The competition is becoming even more ferocious in the Cloud Wars. It’s a buyer’s market—so stand your ground.
Because in the Cloud Wars, the only guaranteed winners are the customers.
Disclosure: At the time of this writing, Microsoft, SAP and Oracle were clients of Evans Strategic Communications LLC.
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