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2016: The year we see the real cloud leaders emerge

Eric Knorr | Jan. 4, 2016
Amazon, Google, and Microsoft know what it means to run hyperscale public clouds, while IBM is learning. Which will capture the enterprise as it lurches skyward?

You can probably rattle off the top enterprise software vendors without thinking: Microsoft, IBM, Oracle, and SAP. According to the best estimates I can find, those four companies together racked up close to $140 billion in software revenue in 2015, led of course by Microsoft and its well-known offerings.

Our cloud future will feature a different foursome -- Amazon, Microsoft, Google, and IBM -- and although public cloud revenues remain a small fraction of those driven by software, growth is by leaps and bounds across the board. AWS, whose long lead seems to grow and grow, pulled in more than $7 billion in 2015, a year-over-year expansion rate of around 80 percent.

Microsoft's cloud business appears to be jumping as well, with an analyst at the firm FBR Capital Markets predicting that Redmond will break $8 billion in cloud revenue for 2016, up from an estimated $5 billion this year. That number includes Office 365, however (which may be cloud connected and cloud delivered, but you can't really call it SaaS).

Based on purported revenue alone, IBM is next in line, since its last quarterly earnings report claimed $4.5 billion in annual public cloud revenue, a 45 percent jump year over year. But like Microsoft -- which was recently chastised for fudging its cloud numbers by none other than ex-CEO Steve Ballmer -- IBM has a history ofinflating cloud revenue for the enjoyment of analysts.

Google doesn't even break out its cloud revenue, but one source, The Information, estimates it to be a mere $400 million for all of 2015. Sounds about right, because until recently, it's been hard to determine whether Google had an enterprise cloud strategy at all.

Then, two months ago, Google Technical Fellow Urs Hölzle predicted that Google's cloud business could outpace its advertising business in five years. To put that in context, Google made around $65 billion in advertising in 2015.

How is Hölzle's conjecture even remotely possible? Because in the public cloud business, infrastructure is everything. Check this recent post by InfoWorld contributor David Mytton: "Global location wars: Amazon vs. Microsoft vs. Google." Google is No. 3 in its global coverage, but the point is the company already boasts an enormous cloud data center footprint thanks to its search/advertising business.

Note that David's map charts public cloud availability regions, not capacity, but there's a reason why he left out IBM: Most of IBM's global presence has come from a buildout of SoftLayer, which lacks the platform services offered by the other three players. The IBM Bluemix PaaS has a rich bundle of services, but as far as we could determine, Bluemix as a public cloud offering is currently available only in the U.S. South, the United Kingdom, and Australia.


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