AWS Thrashing Microsoft, Says TechCrunch—But Revenue Numbers Tell Opposite Story

A very large, successful and well-respected tech-media company last week wrote that “Microsoft is miles behind the cloud leader” (AWS) and is “still struggling to gain meaningful ground on AWS’s lead.”

However, official financial documents released by both companies last week clearly show that Microsoft’s cloud business is much larger than that for Amazon’s AWS unit.

Here are the facts: 

• For Q4, AWS revenue was $9.95 billion, and Microsoft’s commercial-cloud revenue was $12.5 billion. So for Q4, Microsoft’s cloud revenue was 25% larger than AWS’s.
• For calendar 2019, AWS revenue was $35 billion and Microsoft’s cloud revenue was $44.7 billion, which is 27.7% larger than AWS’s.

But the TechCrunch article includes, within just the first several paragraphs, the following comments: 

• “Microsoft is miles behind the cloud leader” (AWS);
• Microsoft is “still struggling to gain meaningful ground on AWS’s lead”;
• “This has to be frustrating to Microsoft  CEO Satya Nadella”; and
• Nadella’s “done everything right to get his company to this point, but sometimes the math just isn’t in your favor.”

The TechCrunch article refers to various types of “numbers” that are scrutinized in the cloud business, including “revenue, year-over-year or quarter-over-quarter growth — or lack of it—or market share.” But at least in its first four paragraphs before registration is required, the article did not cite the numbers that override all others: $44.7 billion in 2019 cloud revenue for Microsoft, and $35 billion for AWS.

The headline on the article is Even as Microsoft Azure revenue grows, AWS’s market share lead stays strong. The article’s attempt to focus on market share while also referring now and then to “revenue” is probably one of the causes for the confusing claim that a company with $35 billion in annual revenue is thrashing a competitor whose revenue in the same market is 27.7% higher at $44.7 billion.

A second likely source of the confusion comes in the third paragraph (after the fourth paragraph, the article requires registration) when the author quotes market-research analyst John Dinsdale of Synergy Research. I take my hat off to Dinsdale and Synergy because over the past 2-3 years they’ve become widely known—and, in articles such as this one from TechCrunch, widely quoted about market shares among cloud vendors. Good for Synergy for gaining widespread credibility as the authority on a portion of the cloud market.

But Synergy plainly states that its research covers only the IaaS and PaaS segments of the cloud market. For a company like AWS, which only competes in those two segments and that created the entire IaaS category about 14 years ago, the range of Synergy’s research is perfect. Synergy covers what AWS does, and AWS competes in the portions of the cloud that Synergy covers.

But here’s the problem: unlike AWS, Microsoft competes in not only IaaS and PaaS but also in SaaS. And Synergy’s research and market-share numbers don’t extend to SaaS, which is a big part of Microsoft’s cloud business.

However, many people in the media take Synergy’s market-share numbers for just two parts of the cloud—IaaS and PaaS—and erroneously portray them as representing the entire cloud, which by necessity must also include SaaS.

Synergy’s numbers depict AWS’s leadership in IaaS and PaaS—and that’s perfectly legitimate—but this particular TechCrunch article positions those numbers as representing the entire cloud landscape. 

Those Synergy numbers simply do not cover the whole cloud landscape.

So when Synergy says AWS is the market leader in IaaS and PaaS over Microsoft and everybody else, it is probably correct. AWS is the undisputed category king in IaaS and, ever since Amazon began breaking out AWS financial results, those results have been most impressive.

But there’s more to the cloud than what Synergy covers. And when articles like this portray a portion of the cloud—IaaS and PaaS—as the entire cloud, they do a disservice to readers trying to understand the dynamics of this hugely strategic marketplace.

TechCrunch has a proud history, a huge audience and significant resources. It’s in a great position to shine more light on the intricacies of the transformational enterprise-cloud market and its key players. I hope TechCrunch will begin to lead the way in clarifying what Synergy’s reports cover, and what they don’t cover; and that while AWS is the king in IaaS and perhaps PaaS, Microsoft’s commercial-cloud business is the unquestionable leader in the field. 

In TechCrunch’s own words from the article under discussion, “Numbers don’t lie.” Indeed they don’t—and the numbers say that Microsoft’s $44.7 billion in commercial-cloud revenue for 2019 is 27.7% larger than AWS’s $35 billion for 2019.

Truer words were never spoken: numbers don’t lie.

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