IaaS Market Share in 2016 – AWS vs Azure
Deutsche Bank estimates AWS revenues are approximately $6 billion, which is nearly ten times the size of their next largest competitor, Microsoft Azure, today. Azure revenues for the current fiscal year are estimated to be around $600 million, representing approximately 2% of Microsoft’s total revenues. Gartner has also estimated that AWS has 14 times the computing capacity of their next 14 competitors combined.
While Amazon Web Services is the clear leader today, Azure is experiencing accelerating adoption in 2015. Microsoft has recently closed its first $25M enterprise Azure deal and is tracking above previous estimates for adoption rates.
A couple key take-aways from Deutsche Bank’s recent report on the IaaS market include:
Gartner sizes the cloud infrastructure (IaaS) market at $17 billion in 2015 and estimates it will double in size by 2018. Gartner sizes the PaaS market at over $4 billion in 2015, attaining a CAGR of 65%+ through 2018. Not bad. Deutsche Bank also predicts large technology vendors will continue their acquisition sprees, further fueling rapid innovation globally in this market.
Deutsche Bank predicts that AWS will continue to be the clear leader in cloud infrastructure services over Azure, Google Cloud, IBM SoftLayer and others. While Azure is growing fast, the researchers found Microsoft to be too tethered to the Microsoft stack to challenge the scale of AWS today. One respondent called AWS “the Microsoft of the next era”. The consensus is that AWS and Azure are break-even at best.
The outsiders most frequently mentioned during interviews are IBM and Google. IBM’s acquisition of SoftLayer in 2013 in addition to their recent announcement of a $3 billion investment in a suite of cloud services for the IoT market continues to attract growing interest. Google is a late entrant to the IaaS market and is well behind AWS, but if anyone can disrupt the market, its them.
Microsoft Azure is averaging more than 10,000 new customers per WEEK. Azure also has 350 million Azure Active Directory users, over 2 million developers registered with Visual Studio Online, and more than 60% of customers using higher level services. *This data came from AzureConf 2014
Deutsche Bank predicts Microsoft Azure’s run rate is $175M/quarter based on the following assumptions… Azure revenues generated $2.6B for the quarter ended December, 2014. The largest percentage of revenue in this segment is from Enterprise Services, which Deutsche Bank estimates at $1.3 billion, leaving 50% from Office 365, Azure and Dynamics Online suite. The last time they disclosed Office 365 revenues they reported an annualized revenue level of $2.5 billion. Microsoft disclosed last year the Office 365 seat growth rate was approaching 88%. Assuming an 88% year over year growth rate, Office 365 revenues could have reached an annualized level of $4.5 billion. The remaining revenues of$175 million must come from Azure and Dynamics Online. Assuming a quarterly contribution of $50 million from Dynamics Online, that leaves $125 million in Azure revenue per quarter.