Amazon.com Inc. continues to dominate the market for basic computing resources that companies access online, basically by outspending its rivals on data centres and other physical resources, said corporate tech executives, and industry analysts.
Annual revenue from Amazon Web Services, or AWS, grew 27 percent last year to $15.5 billion, representing nearly half of the $32.4 billion in total revenues generated by providers in the global cloud infrastructure market, Gartner Inc. said in a report this week.
Microsoft Corp., its closest rival, captured roughly 15 percent of the market, up from 12.7 percent in 2017. No other cloud provider broke 10 percent, the report said.
By moving to the cloud, companies are outsourcing their computing needs: Cloud infrastructure services use their own data centers to provide companies with the raw computing components they have traditionally run in costly in-house data centers. This includes servers, storage, networking and other hardware that cloud-services companies offer on a pay-as-you-go basis.
“AWS is a dominant leader in this space because of their size and scale, ” said Chris Smith, vice president of cloud architecture at Unitas Global LLC, a Los Angeles-based hybrid cloud-services company that is a customer of AWS. He said AWS has “built an incredible ecosystem to support the variety and scale of needs required by their customers.”
Amazon’s position shows that “scalability matters” for chief information officers and other senior enterprise information-technology managers choosing a cloud infrastructure vendor, Gartner vice president Sid Nag said in a research note.
“Right now, AWS is the furthest in terms stability, scalability and product set,” said Fred Lee, chief technology officer at online auto dealership Cars.com, an AWS customer.
Amazon, a cloud market pioneer, on Tuesday launched a network of new data centers in Bahrain, raising the total number of what the company calls “availability zones” to 69 across 22 geographic regions. Each zone contains interconnected data centers. The sheer scale of Amazon’s network of data centers provides users with ready and reliable access to secure computing power.
The company said it plans to build nine new zones in Indonesia, Italy and South Africa.
The expansion is aimed at meeting the rising demand from business customers for the computer capacity needed to deploy artificial intelligence, data analytics, and other advanced capabilities, the company said.
AWS customers include large companies such as Dole Food Co., Hess Corp. and McDonald’s Corp., as well as thousands of startups and small businesses.
Annual revenues in the global cloud infrastructure market are expected to roughly triple over the next three years to $133 billion, led by AWS and Microsoft’s Azure cloud business, according to Forrester Research.
Amazon last week reported $8.4 billion in sales by AWS in the latest quarter, a 37 percent increase from the year-earlier period. Operating income in its cloud-computing business rose 29 percent to $2.1 billion, the company said.
Part of Amazon’s dominance in the market is simply the result of deep pockets, Forrester says. It estimates that AWS spends billions of dollars every quarter building new data centers or expanding existing ones. Apart from Microsoft, most cloud-market challengers are struggling to keep up as Amazon pours more cash into its physical resources, according to Forrester.
“We manage millions of customer interactions every day, so we need the ability to scale our IT environment,” said Zviki Ben-Ishay, chief executive and co-founder of Lightico Ltd., a Tel Aviv- and New York-based startup that uses AWS to develop customer collaboration software for contact centers.
Scale was also a key factor for Kevin Freiburger, director of identity programs at Valid SA, an identity management and biometric matching software maker based in Rio de Janeiro. He said the company chose AWS for a recent job to update Vermont’s driver’s license issuing system because its giant data-center network is able to automatically scale as demand increases, among other factors.
“Our projects are a massive software undertaking and require instant access to infrastructure,” Freiburger said. “We do not have time in a 12-month project to lose three months preparing the data center so that we can start deploying software,” he said.
Source: MarketWatch
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