IaaS revenues reveal a more than two-horse race

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12 July 2016 | 0

Research firm IDC is out with its latest semi-annual tracking of Infrastructure-as-a-Service (IaaS) public cloud vendors and while the top provider in this market, Amazon Web Services, will not surprise, numbers two and three just might.

IDC estimates that IBM’s IaaS cloud revenues are larger than those of Microsoft in this still-emerging market.

“AWS isn’t the only game in town when it comes to cloud,” says IDC analyst Melanie Posey. The cloud market is sometimes seen as a two-horse race with Microsoft trailing AWS, but do not discount IBM, says Posey. “It’s not necessarily the case that everything not running in the public cloud has to get there by a certain date,” she explains. “IBM’s approach has been informed by its customer base, who have all types of workloads that need different deployment models.” Whereas AWS focuses mostly on public IaaS cloud, Microsoft and IBM have a broader offering of cloud and non-cloud offerings, she says.

Cloud numbers game
IDC estimates that AWS’s pure IaaS revenue in 2015 topped $5.516 billion (€4.96 billion). IBM is a distant second at $761.7 million (€685.3 million), while Microsoft pulled in $729.6 million (€656.5 million) in 2015, says IDC.

Rackspace, AliCloud (the IaaS component of Chinese ecommerce giant Alibaba) and Google round out IDC’s list of the top five IaaS cloud vendors in terms of worldwide revenue.

Do consider this, however, when looking at these numbers: cloud vendors are notoriously opaque when it comes to reporting revenue. Amazon reported that it collected $7.8 billion (€7.02 billion) in 2015 from AWS. IDC does not count all AWS offerings as pure IaaS though; the company’s Relational Database Service (RDS) and support services are not lumped into IDC’s IaaS estimate for example, hence the discrepancy in the numbers from IDC and what Amazon reports.

Counting in
Microsoft too provides a cloudy view of its Azure financials. The company lumps IaaS Azure revenue in with on-premises server license revenue, which stood at $5.1 billion (€4.6 billion) as of last year. IDC estimates less than 20% of that is from Azure’s IaaS. Azure also has many PaaS offerings, which IDC would not count. Microsoft also says its Office and Office 365 revenues were more than $6.5 billion (€5.85 billion). So, if a more holistic view of cloud is considered with IaaS, SaaS and PaaS, Microsoft could be earning more than AWS from cloud operations.

IBM is in a similar boat as Microsoft in that it says it counts $10.2 billion (€9.2 billion) in cloud revenue, including $4.5 billion (€4.05 billion) from “as a service” revenues, but does not break out numbers for IaaS, PaaS and SaaS.

Numbers game
IDC bases its Worldwide Public Cloud Services Tracker on multiple factors, including public filings, vendor interviews and survey results, end user surveys and analyst estimates. The Tracker only takes into account pure IaaS, so it does not involve application development platforms, SaaS apps and other non-virtualised, single-tenant hosted services.

Until cloud revenues are more robust, do not expect vendors to willingly break out their financials. In the meantime, we’re left with these rough estimates.


IDG News Service

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