A Tale of 6 Clouds: An Earnings Perspective
Last week was earnings week in Wall Street and, with that, we go some insights into the performance of the cloud platform incumbents. Every quarter I post my opinions about the evolution of the cloud platforms based on the earning reports. However, this quarter feels a bit different as the list of relevant players keeps getting bigger and brighter.
For years, only AWS, Azure and IBM Bluemix were relevant cloud platforms from a Wall Street perspective. In the last two years, Google Cloud has become a force to reckon with in the cloud platform market. Now, companies such as Oracle and Alibaba are worth following as their offering are growing rapidly and they have developed relevant traction on specific market segments.
General Thoughts
The earning seasons has consolidated Amazon as the undisputed cloud leader with Microsoft also distancing itself from the competition for the number 2 spot. Google cloud and IBM Bluemix are on a fierce battle for the third place in the market. After years of struggle, Oracle seems to finally be all in the cloud game and is leveraging its footprint in the enterprise to gain relevant market share. Finally, even though AliCloud’s numbers are relatively small, its dominance in the Chinese market and rapid growth makes it a platform worth following. There are many things about AliCloud that resemblance the early days of AWS.
Artificial intelligence(AI) and cognitive computing seems to be the focus of every cloud platform these days but that often seems more of a message tailored to Wall Street analysts to keep the stock price in check than the real focus for many cloud platforms ;). Let’s review some observations about the individual cloud platforms.
1-AWS
AWS remains the undisputed leader in the cloud platform space with second quarter revenues growing by 55% to $3.23 billion. At its re:Invent conference, AWS unveiled a series of new offerings that erased any doubts about its pace of innovation promised an exciting near term future for the cloud platform.
Immediate Areas of Focus: To maintain its leadership position in the cloud market, AWS should remain competitive in areas such as machine learning(ML) , artificial intelligence(AI), bots, IOT and other emerging technolologies in which AWS is experiencing fierce competition from platforms such as Azure, Google Cloud and Bluemix. The expansion onto international markets, specifically India, should be a strong focus of AWS in the near future.
2-Azure
Microsoft doesn’t report Azure’s revenues as a separate line item. Instead, Azure numbers are included as part of its Intelligence Cloud segment. This quarter, Microsoft did report that Azure revenues grew by 93% and the Intelligent Cloud segment posted revenues of $6.9 billions.
Immediate Areas Focus: Microsoft should continue its relentless focus on bridging the gap with AWS. To accomplish that goal, Azure should continue investing on emerging technologies areas such as AI, IOT or bots on which it has been consistently able to out-innovate AWS. Microsoft should also aggressively continue Azure’s international expansion into attractive markets such as post-Brexit UK and India.
3 — Google Cloud
Alphabet doesn’t report Google Cloud revenue numbers. The non-advertisement segment which includes Google Cloud posted revenues of $3.4 billion. Under Diane Green, Google Cloud has made incredibly smart acquisitions such as Apigee or Twitter Mobile Fabric which have helped to improve relevant capabilities in the platform.
Immediate Areas Focus: Opening new international data centers and improving its core infrastructure services has to be Google Cloud’s top priority. Also, the combination of Cloud ML, TensorFlow and the AI APIs can give Google Cloud an edge over Azure and AWS in the AI space. Google Cloud should also continue adding smart acquisitions that can help to improve its capabilities as well as its developer community.
4 — Bluemix
IBM posted impressive revenues for its “strategic imperatives” group which includes Softlayer and Bluemix. The group posted revenues of $9.5 billion and an expected growth of 11%. Cognitive computing, cyber-security and IOT continued to be the highlights of IBM’s cloud offering.
Immediate Areas of Focus: Continue expanding its leadership in the AI space with Watson as well as its IOT and cyber-security efforts must be IBM’s core focus.
5 — Oracle Cloud
Cloud seems to have a new focus at Oracle. Constant announcements of new products and services and a renewed strategic focus are signaling to the market that Oracle Cloud matters. The revenue numbers are hard to infer as they are reported in combination with other offerings but we should assume they are still small compared to the market leaders.
Immediate Areas of Focus: Doubling down on its core strengths such as database computing and WebLogic cloud migrations should be a strong focus of Oracle Cloud’s strategy in order to improve its market traction.
6 — AliCloud
Alibaba reported revenues of less than $300 ,million for AliCloud. However, the growth (particularly in China) continues to be impressive. From a go-to-market perspective, AliCloud holds a lot of similarities with AWS in the early days.
Immediate Areas of Focus: Consolidating its dominance in China, launching mainstream infrastructure and platform services that bridge the gap with the market leaders and expanding its offering in key areas such as AI and IOT should remain the core focus for AliCloud. I also believe AliCloud should be more aggressive in terms of M&A in order to expand its feature set as well as its developer and partner communities.
