EDITOR'S NOTE: This guide is for 2019. Here's our current version: Top cloud providers in 2020: AWS, Microsoft Azure, and Google Cloud, hybrid, SaaS players.
The top cloud providers for 2019 have maintained their positions, but the themes, strategies, and approaches to the market are all in flux. The infrastructure-as-a-service wars have been largely decided, with the spoils going to Amazon Web Services, Microsoft Azure, and Google Cloud Platform, but new technologies such as artificial intelligence and machine learning have opened the field up to other players.
Meanwhile, the cloud computing market in 2019 has a decidedly multi-cloud spin, as the hybrid shift by players such as IBM, which acquired Red Hat, could change the landscape. This year's edition of the top cloud computing providers also features software-as-a-service giants that will increasingly run more of your enterprise's operations via expansion.
One thing to note about the cloud in 2019 is that the market isn't zero sum. Cloud computing is driving IT spending overall. For instance, Gartner predicts that 2019 global IT spending will increase 3.2 percent to $3.76 trillion with as-a-service models fueling everything from data center spending to enterprise software.
In fact, it's quite possible that a large enterprise will consume cloud computing services from every vendor in this guide. The real cloud innovation may be from customers that mix and match the following public cloud vendors in unique ways.
Key 2019 themes to watch among the top cloud providers include:
To that end, we're taking a different approach to our cloud buying guide and breaking the players into the big four infrastructure providers, the hybrid players, and the SaaS crowd. This categorization has pushed IBM from being a big infrastructure-as-a-service player to a tweener that spans infrastructure, platform, and software. IBM is more private cloud and hybrid with hooks into IBM Cloud as well as other cloud environments. Oracle Cloud is primarily a software- and database-as-a-service provider. Salesforce has become about way more than CRM. Affiliate disclosure: ZDNet may earn a commission from services featured on this page.
AWS sees 2019 as an investment year, as it ramps its technology buildout as well as add sales personnel. Amazon didn't quantify the higher investment, but said it would update throughout the year.
On a conference call with analysts, CFO Brian Olsavsky said 2018 was a lighter than expected year for capital expenditures. "AWS maintained a very strong growth rate and continued to deliver for customers," he said. "2018 was about banking the efficiencies of investments in people, warehouses, infrastructure that we had put in place in 2016 and '17."
The cloud provider is the leader in infrastructure-as-a-service and moving up the stack to everything from the Internet of Things to artificial intelligence, augmented reality, and analytics. AWS is far more than an IaaS platform these days. AWS grew 45 percent in the fourth quarter -- a clip that has been stable for the last year.
When it comes to developers and ecosystem, AWS is hard to top. The company has a wide range of partners (VMware, C3, and SAP) and developers growing the ecosystem. AWS is typically the first beachhead for enterprise players before they expand to a multi-cloud approach.
The big question is how far AWS can extend its reach. AWS can be a threat to Oracle on databases as well as a bevy of other companies. Via its VMware partnership, AWS also has a strong hybrid cloud strategy and can meet enterprise needs multiple ways.
AWS' strategy was evident at its re:Invent conference. The show featured a barrage of services, new products, and developer goodies that was hard to track. Artificial intelligence is a key area of growth and a core sales pitch for AWS as it becomes a machine learning platform. According to 2nd Watch, AWS customers are going for these high-growth areas and seeing the cloud provider as a key cog for their machine learning and digital transformation efforts.
In the first quarter of 2019, Amazon's profits were again powered by AWS. Amazon CFO Brian Olsavsky said AWS now has an annualized run rate of over $30 billion. He highlighted AWS's customer wins for the quarter, including deals with Volkswagen, Ford, Lyft and Gogo. By the second quarter, Olsavsky said AWS was on a $33 billion run rate. The big keep getting bigger.
As for AWS' standing. Gartner kept AWS as its top IaaS provider for 2019.
2nd Watch found that AWS' 2018 fastest growing services were the following:
Based on 2nd Watch usage, the most popular AWS services are:
Also: What serverless architecture really means, and where servers enter the picture
Analytics and forecasting may be one area worth watching for AWS. As AWS rolls out its forecasting and analytics services, it's clear that the company can become more intertwined with real business functions.
AWS' reach continues to expand in multiple directions, but perhaps the one to watch the most is the database market. AWS is capturing more database workloads and has emphasized its customer wins. A move to launch a fully managed document database takes direct aim at MongoDB. Should AWS capture more enterprise data, it will be entrenched for decades to come as it continues to evolve services and sell them to you.
Microsoft Azure is the solid No. 2 to AWS, but it's difficult to directly compare the two companies. Microsoft's cloud business -- dubbed commercial cloud -- includes everything from Azure to Office 365 enterprise subscriptions to Dynamics 365 to LinkedIn services. Nevertheless, Microsoft's strong enterprise heritage, software stack, and data center tools like Windows Server give it a familiarity and hybrid approach that wears well.
Indeed, Microsoft CFO Amy Hood noted that the company is landing larger cloud deals. "In FY '19, we closed a record number of multi-million-dollar commercial cloud agreements with material growth in the number of $10 million-plus Azure agreements," said Hood.
For differentiation, Microsoft has focused heavily on AI, analytics, and the Internet of Things. Microsoft's AzureStack has been another cloud-meets-data center effort that has been a differentiator.
CEO Satya Nadella said the company's cloud unit is honing in on verticals such as healthcare, retail, and financial services. This approach comes right out of the enterprise software selling playbook.
From a mix of services, it starts always with, I would say, infrastructure. So this is the edge and the cloud, the infrastructure being used as compute. In fact, you could say the measure of a company going digital is the amount of compute they use. So that's the base. Then on top of that, of course, all this compute means it's being used with data. So the data estate, one of the largest things that happens, is people consolidate the data that they have and so that they can reason over it. And that's where things like AI services all get used. So we definitely see that path where they're adopting the layers of Azure.
Simply put, Microsoft is selling a wide range of cloud products, but it's hard to break out software-as-a-service versus Azure, which would more directly compete with AWS.
Indeed, Microsoft's ability to target industries has also been a win. Notably, Microsoft has won over large retailers that don't want to partner with AWS since they compete with Amazon. Microsoft also began highlighting more customer wins including Gap as well as Fruit of the Loom.
That take was also echoed elsewhere. Daniel Ives, an analyst at Wedbush, said AWS remains the big dog, but Microsoft has some unique advantages in the field -- notably a strong organization and ground game. Ives wrote:
While Jeff Bezos and AWS continue to clearly be a major force in the emerging cloud shift over the coming years, we believe Microsoft with its army of partners and dedicated sales force have a major window of opportunity in 2019 to convert enterprises to the Azure/cloud platform based on our recent in-depth discussions with partners and customers.
Simply put, Microsoft can couple Azure with its other cloud services such as Office 365 and Dynamics 365. With Azure, Microsoft has a well-rounded stack, ranging from infrastructure to platform to applications to run a business.
It's hard to argue against Microsoft's grand strategy. Microsoft's commercial cloud unit continued to hum along in its fiscal third quarter. The impressive results were followed up by Microsoft Build 2019. At Build 2019, Microsoft rolled out a bevy of updates for developers but the overarching theme was that Azure and cloud services are the center of the company's platform approach.
The software and cloud giant outlined everything from cognitive services based on Cortana to tools to making bots and services for IoT, machine learning and artificial intelligence.
Microsoft also worked out its data story across the cloud to edge computing as well as rounded out its hybrid strategies with the likes of Red Hat.
According to RightScale, Azure is gaining some ground on AWS.
Google Cloud Platform has been winning larger deals, has a new leader with Oracle veteran Thomas Kurian and is seen as a solid counterweight to AWS and Microsoft Azure. The biggest development for Google Cloud has been the company's move to give more guidance on the business. Google CEO Sundar Pichai on the company's second quarter earnings conference call said the cloud unit is now on a $8 billion annual revenue run rate.
The disclosure was a long time coming.
On Google's fourth quarter earnings conference call, Pichai cited numerous data points for Google Cloud Platform (GCP). However, analysts were frustrated by the lack of revenue disclosed. To kick off 2018, Pichai said Google's cloud revenue was $1 billion a quarter evenly split between G Suite and GCP.
Pichai has outlined the following to give observers a better idea of where Google Cloud stands:
For now, Google is on a cloud hiring spree as it builds out the team under Kurian.
A recent hire is Hamidou Dia as Google Cloud's vice president of solutions engineering. Hamidou was most recently Oracle's chief of sales consulting, consulting, enterprise architecture and customer success. Google Cloud also named John Jester vice president of customer experience. Jester will lead a services team focused on architecture and best practices. Jester was most recently corporate vice president of worldwide customer success at Microsoft.
The additions of Dia and Jester come as Rob Enslin joined Google Cloud as president of global customer operations. Enslin was formerly at SAP. Google Cloud's strategy rhymes with proven enterprise software sales techniques that revolve around industry-specific use cases.
Google Cloud Whitepapers: Inside the API Product Mindset | Guide to Data Analytics and Machine Learning | The Future of Cloud Computing | A Faster Path to the Cloud
Meanwhile, Google Cloud is also growing its partnership with SAP as it aims to couple its machine learning and artificial intelligence services with SAP's S4/HANA and C4/HANA.
Add it up, and GCP appears to be a solid No. 3 to AWS and Azure, but how distant it falls behind those two remains to be seen. Wall Street firm Jefferies is predicting that GCP will gain share over time.
Google Cloud under Kurian is in the process of adding firepower via acquisition. For instance, Google Cloud acquired Looker to bolster its analytics. Google Cloud is likely to continue its buying spree to add people and features.
In addition, Google has had its cloud growing pains amid outages for G Suite apps and more infrastructure services.
One move that could boost Google's cloud revenue is a move to increase G Suite prices for some users. G Suite, which competes directly with Microsoft's Office 365, is raising its prices for the first time. G Suite Basic will raise prices from $5 per user per month to $6. G Suite Business will go from $10 per user per month to $12. According to Google, G Suite Enterprise, which runs $25 per user a month, isn't impacted by the price increase.
Competitively, the pricing moves are in line with Office 365. Google has launched an interesting pricing plan for its cloud storage that could give companies more predictable costs.
Alibaba is the leading cloud provider in China and an option for multi-national companies building infrastructure there.
Revenue for Alibaba Cloud was up 66% from a year ago in its June quarter to $1.13 billion. Specifically, Alibaba Cloud said it was aiming to expand its software as a service offerings via partners. Alibaba Cloud is looking to expand its ecosystem for enterprises and help developers expand their markets. The company has rapidly added customers and is currently in the cloud buildout phase. To wit:
Add it up, and Alibaba has a strong home-field advantage in China, but it also has global ambitions. Relationships with the likes of Salesforce and SAP are likely to put it on the radar for more enterprises with operations in China.
While the big cloud providers add more to their stacks with AI as the differentiator, there's a market being carved out to manage multiple cloud providers. This crowd of cloud players used to focus on hybrid architecture to bridge data centers with public service providers, but now aim to be the infrastructure management plane.
Also: What Kubernetes really is, and how orchestration redefines the data center
Research by Kentik highlighted how the most common cloud combination was AWS and Azure, but there are customers working in Google Cloud Platform, too. According to the Kentik survey, 97 percent of respondents reported their companies use AWS, but 35 percent also said they actively use Azure too. Twenty-four percent use AWS and Google Cloud Platform together.
Also: What a hybrid cloud is in the 'multi-cloud era,' and why you may already have one
IBM's cloud strategy and its approach to AI have a lot in common. Big Blue's plan is to enable customers to manage multiple systems, services and providers and become the management console. IBM wants to be a part of your cloud environment as well as help you run it. In 2018, IBM launched OpenScale for AI, which is designed to manage multiple AI tools likely provided by the major cloud providers. IBM also launched multi-cloud tools. Think of IBM as the Switzerland of cloud adoption and computing services strategies.
The move by enterprises to use multiple public cloud providers is interesting and provides the rationale for IBM's acquisition of Red Hat for $34 billion, which has closed. IBM has its own public cloud and will deliver everything from platform-as-a-service to analytics to Watson and even quantum computing through it, but the big bet is that Big Blue with Red Hat can make it a leading cloud management player. For its part, IBM is taking its core intellectual property -- Watson, AI management, cloud integration -- and delivering it through multiple clouds.
The Red Hat acquisition is a bet the farm move by IBM. It remains to be seen how the IBM and Red Hat cultures come together. On the bright side, the two companies have been hybrid cloud partners for years.
For its part, Red Hat developed its Kubernetes game with OpenShift. It also continued to partner with the hybrid cloud ecosystem including Microsoft Azure. Microsoft CEO Nadella even popped in on Red Hat Summit.
Indeed, IBM CFO James Kavanaugh on the company's fourth quarter earnings conference call reiterated the Red Hat reasoning and noted Big Blue is seeing more deals for IBM Cloud Private and its approach to "hybrid open" cloud environments. Kavanaugh added:
Let me pause here to remind you of the value we see from the combination of IBM and Red Hat, which is all about accelerating hybrid cloud adoption. The client response to the announcement has been overwhelmingly positive. They understand the power of this acquisition and the combination of IBM and Red Hat capabilities in helping them move beyond their initial cloud work to really shifting their business applications to the cloud. They are concerned about the secure portability of data and workloads across cloud environments, about consistency in management and security protocols across clouds and in avoiding vendor lock-in. They understand how the combination of IBM and Red Hat will help them address these issues.
Also: The AI, machine learning, and data science conundrum: Who will manage the algorithms?
IBM's as-a-service revenue run rate exiting the fourth quarter was $12.2 billion to make it a strong cloud provider, but not comparable to the likes of AWS and Azure today. It is quite possible that the strategies of all the large cloud providers ultimately converge.
The new hybrid and multi-cloud landscape may be one of the more critical things to watch in the cloud wars for 2019.
Here are some key players to consider:
VMware: It is part of the Dell Technologies portfolio, and it has had traditional data centers in the fold for years. The company emerged as a virtualization vendor and then adopted everything from containers to OpenStack to whatever else emerged. Perhaps, the best move for VMware was its tight partnership with AWS. This hybrid cloud partnership is a win-win for both parties and both companies have continued to build on their initial efforts. The partnership is so interesting that VMware is helping to bring AWS on premises. To wit:
Of course, VMware also has its vRealize Suite, vCloud Air, VMware HCX, Cloud Management Platform, vSphere, and networking products.
Dell TechnologiesandHPE: Both of these vendors have multiple products to operate data centers and are plugging into cloud providers.
HPE's plan boils down to multi-cloud, hybrid infrastructure that extends to the edge.
Dell Technologies, however, made the biggest splash in the hybrid space. Dell Technologies used its annual customer conference to outline its Dell Cloud Platform and how it would integrate various parts of its portfolio. The upshot is that VMware, majority owned by Dell Technologies, would act as the glue between its products and services. The effort gives Dell Technologies a more integrated approach to its cloud efforts to bridge private, on-premises and public compute resources.
And then, there's Cisco, which via acquisitions has built out a sizeable software portfolio. Cisco outlined a data center anywhere vision that revolves around plugging its application centric infrastructure (ACI) into multiple clouds. No matter how you slice the hybrid cloud game, the end state is the same: Multiple providers and private infrastructure seamlessly connected. Cisco also has partnerships with Google Cloud. Kubernetes, Istio, and Apigee serve as the glue in the Cisco-Google effort.
While the hybrid cloud market was widely panned as legacy vendors cooking up new ways to sell hardware, the new multicloud world has more acceptance even among the former upstarts who wanted to turn the likes of IBM, VMware, Dell, and HPE into dinosaurs.
The SaaS market also highlights how vendors and their changing strategies and acquisition plans make cloud classification more difficult. In the 2018 edition of our cloud rankings, Oracle was lumped into the AWS, Azure, and GCP crowd largely because it was trying to play in the IaaS market.
While CTO Larry Ellison still seems to be obsessed with AWS, Oracle is essentially a software- and database-as-a-service company. Perhaps Oracle's efforts to automate the cloud and cook up next-gen infrastructure pay off, but for now, the company is really about software. Salesforce via the acquisition of MuleSoft has also changed its stripes a bit and added an integration spin to the cloud strategy (and even a bit of traditional software licensing). SAP has grown into a sizable cloud player and Workday has opened its ecosystem.
Covering every SaaS player is beyond the scope of this overview, but there are a group of vendors that could be called SaaS+. These cloud service providers extend into platforms and all of these vendors have multiple SaaS products that can run your business.
In Gartner's 2018 Magic Quadrant for IaaS as well as 2019, the research firm narrowed the field to just cloud companies. Oracle made the cut. Oracle is seen as a niche infrastructure cloud provider.
Let's get real: Oracle is a SaaS provider and there's no shame in that. In fact, Oracle is damn good at the SaaS game and has everything covered from small- and mid-sized enterprises via NetSuite to large companies migrating on-premise software to the cloud.
But the real differentiation with Oracle is its database. The company has a massive installed base, an autonomous database that aims to take away grunt work and the potential to put its technology on more clouds beyond its own. Oracle is pitching itself as a Cloud 2.0 player.
For now, Oracle is a bit obsessive about AWS. Consider:
Andy Mendelsohn, executive vice president of database server technologies at Oracle, said it's very early in the cloud migration of databases. "In the SaaS world it's a mature market where enterprise customers have accepted they can run HR and ERP in the cloud," he said. "Database in the cloud has very little adoption."
Mendelsohn said what Oracle sees more of is customers using services like Cloud at Customer and a private cloud approach to moving databases. Initiatives like Oracle's autonomous database may be more about a private cloud approach, he said.
Among smaller companies, databases are more prevalent in the cloud because there's less investment needed.
"The big battleground will revolve around the data. It's the core asset at every company out there," he said.
Cloud at Customer is part of how Oracle sees its multi-cloud strategy. Analysts have raised concerns that Oracle should run its software and databases on more clouds.
Following Oracle's second quarter earnings in December, Stifel analyst John DiFucci said:
While we continue to think Oracle is well-positioned in the SaaS market, we remain more cautious around PaaS/IaaS, both in terms of top-line revenue and associated cap-ex implications.
While there is little question in our mind that Oracle's installed base is extremely secure, we believe that a large portion of net new database workloads are going to non-Oracle platforms (hyperscale solutions, NoSQL, open source, etc).
We remain cautious on Oracle's IaaS efforts and support the notion of Oracle increasing support for other clouds.
Mendelson said that Oracle has worked with multiple vendor strategies throughout its history, so it's not much of a stretch to see multi-cloud emerge over time.
Salesforce started as a CRM company 20 years ago and has expanded into everything from integration to analytics to marketing to commerce. Woven throughout the Salesforce clouds are add-ons such as Einstein, an AI system.
Simply put, Salesforce wants to be a digital transportation platform that is targeting fiscal 2022 goal of revenue between $21 billion to $21 billion.
Most cloud vendors -- public, private, hybrid or otherwise -- will tell you the game is capturing data under management. Salesforce also sees the promise of being the data platform of record. Salesforce is also pushing heavily into the analytics game as it acquired Tableau in a deal worth $15.7 billion. The argument is that Tableau and its ability to add more data scientists to the Salesforce ecosystem is a strategic bet. While Salesforce's purchase of Tableau will make it less SaaS today, the company is likely to deliver the visualization software as a service in the future.
In any case, Salesforce's purchase of Tableau means there will be a run on analytics companies.
Enter Salesforce's Customer 360. The master plan is to use Customer 360 to enable Salesforce customers to connect all their data into one view. The idea isn't exactly original, but Salesforce's argument is that it can execute better and put the customer at the center of the data universe.
Add it up, and Salesforce is becoming a platform bet for its customers. Salesforce co-CEO Keith Block said the company is landing more deals worth $20 million or more and recently renewed a nine-figure win with a financial services company. Marc Benioff, co-CEO and chairman, said that Einstein AI is being added into all of the company's clouds.
Salesforce has also partnered well with the likes of Apple, IBM, Microsoft (in some areas), AWS, and Google Cloud.
The go-to-market strategy for Salesforce revolves around selling multiple clouds and developing industry specific applications such as the company's Financial Services Cloud.
I've traveled around the world meeting with more than 100 CEOs and world leaders. The conversation is consistent everywhere I go. It's about digital transformation. It's about leveraging our technology. It's about our culture, and it's about our values. This C-level engagement is translating into more strategic relationships than ever.
For 2019, there's little on the radar -- short of a broad economic downturn -- that would derail Salesforce's momentum. Yes, Oracle and SAP remain fierce rivals with the latter actively pitching its next-gen CRM system, but Salesforce is seen as a digital transformation engine. Microsoft is another competitor worth watching, since it also wants to offer a single view of the customer. Dynamics 365 is becoming more competitive with Salesforce. With its Marketing Cloud, Salesforce competes with Adobe. As Salesforce continues to expand so will its competitive set.
SAP has a sprawling cloud software business that runs from ERP and HR to expenses (Concur) as well as Ariba. The company is primary enterprise software, but customers are migrating to the cloud. SAP's approach rhymes with Oracle's strategy, but there's a key difference: SAP will run on multiple clouds.
CEO Bill McDermott noted the SAP cloud partners on the company's fourth quarter earnings call. "SAP has strong partnerships with Microsoft, Google, Amazon, Alibaba, and others to embrace this value creation opportunity," he said. "Customers can run on-premise, in a private cloud or in the public cloud. It's their choice."
The SAP cloud lineup consists of the following:
In the end, SAP is a mix of traditionally licensed software and cloud versions. CEO Bill McDermott also outlined some big growth goals. For 2019, SAP is projecting cloud subscription and support revenue between €6.7 to €7.0 billion.
Going forward, SAP is projecting cloud subscription and support revenue of €8.6 to €9.1 billion. By 2023, SAP wants to triple cloud subscription and support revenue from the 2018 tally.
SAP's Sapphire 2019 conference made it clear that the company is aiming to be a cloud data player, put more of its S4/HANA and C4/HANA applications in the cloud and be a partner to large service providers. To that end, SAP partnered more with Azure, AWS and Google Cloud.
The biggest theme is that SAP wants HANA to be a gateway to corporate data and has launched a cloud data warehouse. The competition is stiff, but the game plan for SAP, like Oracle, is to migrate its customer base to the cloud. The big difference is SAP isn't focused on the base infrastructure cloud layer.
Workday made its name with human capital management, expanded into financials and ERP, and is adding analytics via a series of acquisitions.
Before AWS became an Oracle obsession, Workday was a primary target of Larry Ellison's rants. Those verbal barbs from Ellison became a tell that Workday was faring well.
Most of Workday's revenue derives from HCM, but the company is starting to sell financials along with it. In other words, Workday is trying to develop that multi-cloud playbook that Salesforce has going. That said, Workday also has a lot of runway for HCM. Workday hasl half of the Fortune 50 as customers and about 40 percent of the Fortune 500.
The analytics business for Workday is being developed via acquisition. Workday acquired Adaptive Insights, a business planning player, and will target analytics workloads.
While Workday fared well on its own, the company was slow to broaden its ecosystem and run on infrastructure from the public cloud giants. Workday has opened up to allow customers to run on AWS and that's a big move that could pay dividends in the future.
The company also launched the Workday Cloud Platform, which allows customers to write applications inside of Workday via a set of application programming interfaces. The Workday Cloud Platform, launched in 2017, makes its platform more flexible and open.
In 2019, you can expect Workday to explore expansion ito more industries beyond education and government. Healthcare could be an option for a broader effort.
Robynne Sisco, CFO of Workday, said at an investor conference in December:
When you think about expanding in terms of industry operational systems, there's really a lot that we could do going forward. We could do retail. We could do hospitality. As of right now, we've got a lot of things we're working on. So we're staying where we are. But industry does become very important when you talk about selling financials.
Workday is also targeting more mid-sized businesses with Workday Launch, a fixed-fee, preconfigured application package.
The competitive set for Workday is Oracle and SAP for HCM and Financials. Also watch Salesforce, which is a Workday partner and potential foe in the future. Another wild card for Workday will be Microsoft, which is integrating LinkedIn more for HR analytics.