Spending on cloud computing infrastructure continues to grow at a furious pace, but cloud vendors will have to work harder for their profits from now on.
Global cloud infrastructure services market grew 42 percent year-on-year in the first quarter of 2019 with Amazon Web Services (AWS) making the biggest gain in dollar terms with sales up by $2.3 billion (41%) on Q1 2018, according to data from tech analyst firm Canalys. That performance put AWS further ahead of second-placed Microsoft, even though it grew sales by $1.5 billion or 75 percent. Google was the fastest growing of the top three in percentage terms, up 83 percent from $1.2 billion to $2.3 billion.
A market growing at 42 percent year on year (although slightly slower than the 46% growth in Q4 of last year) is pretty remarkable. But according to Canalys, the battle for enterprise customers will intensify this year as the big cloud vendors seek to maintain that growth.
Many businesses have already finished moving easy-to-shift applications to the cloud, and are maturing their approach to cloud computing. This involves moving to multi-cloud and hybrid-IT strategies that aim to use the strengths of different cloud service providers and deployment models, depending on their varying application and data requirements, compliance, cost and performance, the analyst firm said.
"The cloud infrastructure market is moving into a new phase of hybrid IT adoption, with businesses demanding cloud services that can be more easily integrated with their on-premises environments," said Canalys' chief analyst Alastair Edwards.
"As enterprises become more selective about which workloads are moved to the cloud, and which remain in their own data centers, cloud service providers must develop new strategies that ensure their continued relevance," Edwards added.
Edwards said that most cloud service providers are now looking at ways to enter customers' existing data centers. For example, AWS will start shipping its first appliance, Outposts, later this year, which will see AWS hardware on customer premises, largely to deal with the issue of latency. Other vendors are looking at how to integrate across multiple clouds, like Google Anthos, an application management platform that supports multiple clouds. Adding new partners or making cloud part of a broader business transformation strategy are other ways that cloud vendors will try to boost sales this year.
Most companies will end up using a combination of in-house data centers, plus cloud-computing technologies across a number of vendors. Few will chose to pick just one vendor for every service. This means that cloud companies will have to build more alliances to sell their services; Canalys expects that a growing proportion of cloud sales will be delivered through indirect partners in 2019 and beyond.