Amazon is Dominating the Cloud but is it Really Out-innovating its Rivals?
Amazon just posted a monster quarter in which AWS reported second-quarter revenues of $2.9B. That number represents an impressive 58.2% year-over-year growth and 12.5% growth from the previous quarter. These numbers accentuate AWS lead in the highly competitive cloud computing space. Many analyst claims that today AWS holds about 31% market share which is more than Microsoft, Google and IBM combined. The following chart provides an overview in the current cloud computing market distribution.
One of the areas that is often overlooked when comes to AWS and that can result interesting and concerning at the same time is that AWS doesn’t seem to move as fast into new technology areas as some of its rival. On the contrary, if we explore some of the newest technology trends, we will see that companies like IBM, Microsoft or Google have been quicker than Amazon to release new technologies and established themselves earlier in the market. Let’s explore this thesis by looking at four of the hottest technology areas in the current market.
· Artificial Intelligence(AI): IBM currently dominates the AI cloud space with the release of the Watson developer cloud. Microsoft recently announced the general availability of its cognitive services suite with over 20 AI APIs. Google has been steadily adding AI capabilities to Google Cloud with the release of the Google Vision, Speech and Natural Language Processing APIs. Additionally, Google open sourced its TensorFlow engine that has quickly become one of the most popular deep learning frameworks in the market. To this day, AWS doesn’t include native AI capabilities.
· Blockchain Technologies: Microsoft and IBM have been quickly to announce their blockchain as a service (BaaS) initiatives. Both technology giants have also invested in the release of their own blockchain technologies in the form of the Hyperledger and Betchley porojects respectively. AWS has hinted some initial impressions to enter the space but no concrete technology has been announced.
· Microservices: The recent release of the Azure Service Fabric represents Microsoft’s first attempt to provide a general purpose framework for the development and management of microservices at cloud scale. Google has also been active in the space with technologies like Kubernetes. Today’s AWS support for microservices is constrained to containers and technologies like AWS Lambda.
· Bot Technologies: Even though Amazon Echo is one of the most successful bot technologies in the market, companies like Microsoft and Google have been more active investing in general purpose AI and bot technologies that can be used across different channels.
The following matrix summarizes the technology investments in the areas described above.
AWS’ slow innovation pace in some of these new technology areas should not be a cause for a concern at the moment. Obviously, AWS is still capitalizing big time in more established technology segments and some of these new areas account for a very small percentage of the overall cloud revenues. The increasing relevance of these technology areas might help Microsoft, IBM and Google to close the gap with AWS in the near future.