Posts tagged: approached

The cloud infrastructure market has put the doldrums of 2023 firmly behind it with another big quarter. Revenue continues to grow at a brisk pace, fueled by interest in AI. Synergy Research reports revenue totaled $79 billion for the quarter, up $14.1 billion or 22% from last year.

This marked the third consecutive quarter that year-over-year growth was 20% or more and AI was a big part of that growth, according to Synergy.

The bottom line is that the cloud, in spite of last year’s hiccups, is showing little sign of slowing down. Even with some element of political and economic uncertainty on the horizon, Synergy chief analyst John Dinsdale sees a market that will continue to grow, with the firm expecting the market to double again in four years’ time. It took 13 quarters to double from $40 billion to almost $80 billion (which it will surpass soon).

One surprise this quarter was Microsoft Intelligent Cloud, which includes Azure, missing analysts’ estimates. The company reported $28.52 billion versus analysts’ expectations of $28.68 billion, per CNBC; Azure still grew 30%, per Altimeter partner Jamin Ball, so it wasn’t all bad news.

Dinsdale says that it’s important, however, not to make too much out of the miss. “Microsoft’s Intelligent Cloud quarterly revenues came in within the guidance range provided by Microsoft three months ago. To be growing a $28.5 billion business by 19% a year is no mean feat. Azure is the largest chunk of Intelligent Cloud and it grew by 29% [for the quarter], which is actually rather impressive,” he told TechCrunch.

Amazon reported revenue of $26.3 billion for the quarter, up 19% over the prior year, as it seems to have settled into this growth rate range for the time being after dipping into the 12% and 13% range in early 2023.

Google Cloud had a nice quarter pushing over $10 billion for the first time, up 29% YoY, per Ball. But it’s important to note his number includes Google Workspace, as well as infrastructure services. More importantly, perhaps, the company gained a full percentage point of market share, according to Synergy, whose numbers don’t include Workspace.

The overall market share numbers came out to 32% (around $25 billion) for Amazon; 23% (around $18 billion) for Microsoft; and 12% (around $9.5 billion) for Google. It’s worth noting that Microsoft lost approximately two percentage points of market share over last quarter, according to Synergy, yet continues to grow at a brisk rate — a point that Dinsdale acknowledged, attributing the drop to seasonality in the Azure sales cycle.

“There is some seasonality to Azure numbers and sequential growth is often weak in the April-June quarter after strong growth in the previous quarters. That happened again,” he said. “While Azure did not grow relative to the first quarter, both Amazon and Google did and their market shares both improved. If you take out the seasonality and look at rolling annualized growth rates, Azure actually grew more than either Google or Amazon. Azure is most definitely not in a trough.”

In the next tier of companies, Oracle nudged up to 3%, passing IBM and tying Salesforce for fifth place overall. While that might sound good, the Big 3 account for more than 73% of the market, but 3% is still good for over $2 billion in revenue.

It does get confusing looking at the different ways the companies and the firms that watch them count cloud numbers. Ball is looking at publicly reported information. Synergy looks at infrastructure as a service, platform as a service and hosted private cloud services. It does not count SaaS and includes some of its own market analysis in its numbers.