In our recent conversations with customers, we’ve started to notice a trend gathering speed. Amazon Web Services has dominated the public cloud market for almost 10 years, at times feeling synonymous with “public cloud.” However, organizations are now making real progress in cloud adoption, and including more than one cloud provider in their strategies: AWS, Microsoft Azure, Google Cloud, IBM SoftLayer and more. Taking steps to avoid vendor lock-in is a basic rule of IT, and it applies to cloud services now more than ever.
When Amazon announced its final quarterly earnings for 2016, the numbers missed analysts’ expectations, and while the AWS revenues continue to grow impressively for such a mature business (47 percent), this growth rate is its lowest in two years. Meanwhile, Microsoft Azure revenues have grown by 93 percent, with usage also nearly doubling year-over-year. Analysts estimate Azure is now a $3 billion business, generating around 20% of all commercial cloud revenue.
This news didn’t come as a surprise to the ClearSky team. For more than a year, CIOs and cloud decision-makers have been increasingly interested in Azure as an alternative “primary cloud.” AWS remains the clear market leader and has a staggering number of interlocking services that add layers of value, with more than 1,000 new features rolled out just last year. But Microsoft has pulled much closer in terms of cloud features and functionality, and is leveraging its enterprise roots and relationships to win over customers who either don’t want to be locked into Amazon, or have been waiting on the sidelines to get serious about cloud.
For the first time this past year, I’ve heard CIOs tell me that they are betting on Azure as their primary cloud, and will keep AWS for workloads where Azure has not yet caught up. Microsoft wins on some of the fundamentals of enterprise procurement, consumption and flexibility, such as negotiated discounts, editing of legal docs, etc. – the softer relationship issues rather than just how well its cloud performs or stays up. In addition, many IT leaders say that since they have large on-prem Microsoft footprints (or are mostly Microsoft shops), it’s a natural extension for their developers to embrace Azure.
In many ways, it’s ironic that Microsoft has emerged as the “kinder, gentler” cloud provider. Does anyone remember the bad old days of Steve Ballmer and Bill Gates? But given the company’s deep understanding of enterprise buying behavior, and the laser focus of its CEO, Azure has clearly shown that it’s at least a two-horse race, and must be included in cloud strategies for enterprises and service providers alike.
Learn more about defining and deploying a successful cloud strategy.