The market share, influence, and adoption of AWS

It is hard to argue that AWS is not the gorilla in the cloud market. For the first 9 years of AWS's existence, Amazon did not break down their AWS sales and their profits. As of January 2020, Microsoft does not fully break down its Azure revenue and profit. As of 2019, in its quarterly reports, they were disclosing their Azure revenue growth rate without reporting the actual revenue number and instead burying Azure revenues in a bucket called Commercial Cloud, which also includes items such as Office 365 revenue. Google, for a long time, has been cagey about breaking down its GCP revenue. Google finally broke down its GCP revenue in February 2019.

The reason cloud providers are careful about reporting these raw numbers is precisely because of the Gorilla Game. Initially, AWS did not want to disclose numbers because they wanted to become the gorilla in the cloud market without other competitors catching wind of it. And if Microsoft and Google disclosed their numbers, it would reveal the exact size of the chasm that exists between them and AWS.

Even though AWS is the gorilla now, and it's quite difficult to dethrone the gorilla, it appears the growth rates for GCP and Azure are substantially higher than AWS's current growth rate. Analysts have pegged the growth rate for GCP and Azure at about 60% year on year, whereas AWS's recent year-on-year revenue growth is closer to 30% to 40%. But the revenue for Azure and GCP is from a much smaller base.

This practice of most cloud providers leaves the rest of us guessing as to what the exact market share and other numbers really are. But, analysts being analysts, they still try to make an educated guess.

For example, one recent analysis from Canalys Cloud Channels in 2019 puts AWS's share of the market at around 33% and the market share for its closest competitor, Azure, at around 17%.

Up until this point, AWS has done a phenomenal job of protecting their market share by adding more and more services, adding features to existing services, building higher-level functionality on top of the core services they already offer, and educating the masses on how to best use these services. It is hard to see how they could lose the pole position. Of course, anything is possible, including the possibility of government intervention and regulation, as occurred in the personal computer chip market and in the attempt the government made to break up Microsoft and their near monopoly on the personal operating system market.

We are in an exciting period when it comes to cloud adoption. Up until just a few years ago, many C-suite executives were leery of adopting cloud technologies to run their mission-critical and core services. A common concern was that they felt having on-premises implementations was more secure than running their workloads on the cloud.

It has become clear to most of them that running workloads on the cloud can be just as secure, if not more secure, than running them on-premises. There is no perfectly secure environment, and it seems that almost every other day we hear about sensitive information being left exposed on the internet by yet another company. But having an army of security experts on your side, as is the case with the major cloud providers, will often beat any security team that most companies can procure on their own.

The current state of the cloud market for most enterprises is a state of Fear Of Missing Out (FOMO). Chief executives are watching their competitors jumping on the cloud and they are concerned that they will be left behind if they don't take the leap as well.

Additionally, we are seeing an unprecedented level of disruption in many industries propelled by the power of the cloud. Let's take the example of Lyft and Uber. Both companies rely heavily on cloud services to power their infrastructure and old-guard companies in the space, such as Hertz and Avis, that rely on older on-premises technology are getting left behind. In fact, on May 22, 2020, Hertz filed for bankruptcy protection. Part of the problem is the convenience that Uber and Lyft offer by being able to summon a car on demand. Also, the pandemic that swept the world in 2020 did not help. But the inability to upgrade their systems to leverage cloud technologies no doubt played a role in their diminishing share of the car rental market.

Let's continue and learn some of the basic cloud terminology in general and AWS terminology in particular.