Menu
​AWS prints money for Amazon, but can Microsoft, Google and IBM catch up?

​AWS prints money for Amazon, but can Microsoft, Google and IBM catch up?

Can the leading Cloud vendor maintain its sizeable lead in the market?

Jeff Bezos - CEO, Amazon

Jeff Bezos - CEO, Amazon

Amazon Web Services (AWS) continues to surge ahead in its quest for unrivalled Cloud dominance, with strong sales and record profits positioning the tech giant for future growth.

As revealed last week, the AWS division of Amazon reported 58 percent year-to-year growth to almost $US2.9 billion, supported by continued operating efficiencies that enabled the business to reach $US718 million in operating profit.

Yet despite another blockbuster quarter, and a healthy lineup to match, can the leading Cloud vendor maintain its sizeable lead in the market?

“AWS is comfortable in its leading position and confident in its ability to sustain its pace of innovation, which it touts as a differentiator,” Technology Business Research, analyst, Meaghan McGrath, said.

“However, increasingly competitive vendors and hybrid Cloud acceptance by customers will challenge the share AWS continues to win.”

Going forward, McGrath expects that AWS revenue growth will maintain its “high-but-slightly-decelerating pace”, even as the Cloud vendor rapidly expands its capacity and global reach, due to revenue base scaling, service price reductions and increased competitiveness in more engagements.

Competition

As the market heats up, analysts believe the tech giant is under growing pressure from Microsoft Azure, Google Cloud Platform and IBM SoftLayer.

Worldwide Cloud infrastructure services expenditure grew 52.3 percent year on year in Q2 2016, with Canalys findings pitching AWS as the leading Cloud infrastructure services provider, accounting for 30.4 percent of total spend.

“Its early mover advantage, aggressive pricing, broad geographic coverage and wide range of service offerings are key factors behind its success,” Canalys research analyst, Daniel Liu, said.

Despite the growth however, overall, the other four providers represented 60.5 percent of total worldwide Cloud infrastructure services spend, with Microsoft Azure’s 102 percent jump boosting the growth within the quarter.

“The need for scalable and on-demand infrastructure is being driven by application testing, development and hosting; content delivery, big data and analytics; machine learning, IoT, disaster recovery and back-up; plus storage,” Liu added.

“But not every organisation and every workload will migrate to the Cloud. Cost is a major issue, but also compliance and regulations, security concerns, and application readiness are determining factors in Cloud migration strategies.

“The adoption of hybrid Cloud and on-premises solutions is prevalent as organisations seek to get the best of both worlds.”

Not only does AWS face competition from other Cloud vendors, McGrath believes the business also lacks its own legacy install base of customers that can support growth by being transitioned to Cloud alternatives, as Oracle, Microsoft and IBM have.

“While these legacy vendors work to retain their customers in transition, AWS conversely adapts its customer engagement efforts and must articulate a clear migration path from each competitor’s legacy solutions to AWS in order to convert customers to AWS’ alternative Cloud services,” McGrath explained.

As part of this strategy, AWS has added to its migration services to make it easier for customers to migrate from legacy solutions to AWS.

These updates include the addition of AWS Migration Competency to its Competency Program, the AWS Application Discovery Service, a new feature to accelerate Amazon S3 data transfer and a larger Snowball appliance that will be available in more regions.

“These added features aim to entice potential AWS customers to migrate to AWS from their current legacy solutions,” McGrath added.

Analysts are also in agreement that for AWS to drive more IaaS revenue through its marketplace, independent software vendors (ISVs) will play a crucial role in extending AWS’ Cloud offerings and global reach.

Currently, AWS’ Marketplace consists of more than 2,700 offerings from 925 ISVs, with the vendor recently opening product registration to European Union-based ISVs, even if the ISV does not have a U.S.-based entity.

As McGrath explained, the update will expand the AWS Marketplace by allowing smaller EU-based ISVs the opportunity to make their product available to a larger customer base, and will help drive even more AWS IaaS usage through the marketplace.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags amazonGoogleIBMMicrosoftAWSCloudTechnology Business ResearchCanalys

Featured

Slideshows

Educating from the epicentre - Why distributors are the pulse checkers of the channel

Educating from the epicentre - Why distributors are the pulse checkers of the channel

​As the channel changes and industry voices deepen, the need for clarity and insight heightens. Market misconceptions talk of an “under pressure” distribution space, with competitors in that fateful “race for relevance” across New Zealand. Amidst the cliched assumptions however, distribution is once again showing its strength, as a force to be listened to, rather than questioned. Traditionally, the role was born out of a need for vendors and resellers to find one another, acting as a bridge between the testing lab and the marketplace. Yet despite new technologies and business approaches shaking the channel to its very core, distributors remain tied to the epicentre - providing the voice of reason amidst a seismic industry shift. In looking across both sides of the vendor and partner fences, the middle concept of the three-tier chain remains centrally placed to understand the metrics of two differing worlds, as the continual pulse checkers of the local channel. This exclusive Reseller News Roundtable, in association with Dicker Data and rhipe, examined the pivotal role of distribution in understanding the health of the channel, educating from the epicentre as the market transforms at a rapid rate.

Educating from the epicentre - Why distributors are the pulse checkers of the channel
Kiwi channel reunites as After Hours kicks off 2017

Kiwi channel reunites as After Hours kicks off 2017

After Hours made a welcome return to the channel social calendar last night, with a bumper crowd of distributors, vendors and resellers descending on The Jefferson in Auckland to kickstart 2017. Photos by Maria Stefina.

Kiwi channel reunites as After Hours kicks off 2017
Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow Electronics introduced Tenable Network Security to local resellers in Sydney last week, officially launching the distributor's latest security partnership across Australia and New Zealand. Representing the first direct distribution agreement locally for Tenable specifically, the deal sees Arrow deliver security solutions directly to mid-market and enterprise channel partners on both sides of the Tasman.

Arrow exclusively introduces Tenable Network Security to A/NZ channel
Show Comments