Do Not Pass Go: AWS Monopoly Tastes Like Awful Starbucks Coffee

2014 In Review

Many forecasts are published this time of year to frame expectations for the next 12 months. This report looks in the opposite direction, reviewing 2014 through the lens of projections made last January, as follows:

  • Introduction
  • Hybrid Cloud – Yes
  • Platform as a Service – Yes
  • AWS – No, Their Cloud Monopoly is Crumbling
  • Newsflash: Starbucks is Terrible

Introduction

As any history buff will tell you, you can understand the future by looking at the past. James Bourne of CloudTech covered the 12-month past and future of the market, including an analysis of the forecast made by the industry blog in December 2013. He determined that CloudTech had been correct with two out of its three predictions:

1. Hybrid Cloud – Yes

Analysts agreed entering 2014 that hybrid cloud would grow at an incredible rate. Len Padilla, vice president of product strategy for NTT Europe, explained the gist of why different types of clouds are being combined: “Public cloud offers cost and scale benefits, while private cloud provides security and control.”

Hybrid did end up surging, as suggested by an October poll of business professionals attending the 2014 Cloud Expo and AWS Summit. More than one out of every two participants said that they had either deployed or were planning deployment of hybrid systems. Similarly, IDC estimates that $118 billion will be spent on cloud services during 2015, primarily boosted by hybrid growth in the enterprise.

What gets a little fuzzy here is that the above indicators do not apply to SMB’s. Clearly the AWS tradeshow was slanted toward people who have already adopted cloud or are themselves technologists. The IDC forecast is focused on enterprises, not small businesses. Hybrid cloud, then, is not yet as widely understood and appreciated as some of the current surveys and projections might suggest.

Even within the pool of companies that expect to adopt hybrid cloud, there is still considerable ambiguity. Case in point: A poll by Avanade determined that while firms expect more than 50% of their computing to be conducted through a hybrid model by the end of 2017, there is still vast unsureness about what hybrid even technically means (which is fueled by different definitions, such as the question of whether combining multiple public clouds is hybrid, or whether public and private components are fundamental – the latter of which is the one used by Bourne and most widely accepted) and what is specifically needed to ramp up for integration or migration.

2. Platform as a Service – Yes

PaaS, like the hybrid cloud, was widely acknowledged as a major segment for 2014 growth. That projection was generally accurate as well.

IBM announced the availability of its new developer platform BlueMix, which garnered the most attention. Another major platform release was the European launch of Performance Dynos, built by the Salesforce subsidiary Heroku.

However, like hybrid, everything isn’t coming up roses in this department either. In December, CloudBees decided to discard its platform business in order to center itself on its enterprise plan for open-source continuous integration server Jenkins in September. Bourne also notes that “there have also been discussions about XaaS (everything as a service) and the dissolution of traditional cloud service models.”

3. AWS – No, Their Cloud Monopoly is Crumbling

The third significant growth area, along with hybrid and platforms, was not a type of service or structure but a single company. That makes sense: leading into 2014, Amazon Web Services had such a stranglehold on the infrastructure market that it seemed almost unassailable. AWS was, at that time, seeing revenue growth better than the second, third, fourth, and fifth largest providers combined.

AWS’s rocketship started losing fuel in 2014. Clearly, the company is still well ahead of its competitors in sheer sales volume. However, three other companies are now nipping at its heels. Synergy Research released financial analysis from the second quarter demonstrating that Microsoft had shown itself to be the primary rival for AWS at midyear. While AWS grew 49% (not shabby), three other major tech companies poured on the heat:

  • Microsoft – 164% growth
  • IBM – 86% growth
  • Google – 49% growth.

Notably, though, John Dinsdale of Synergy did not think the incredible growth rates of Microsoft and IBM represented a real challenge to AWS as the king of the hill: “I do not think that Amazon is resting on its laurels – quite the opposite actually.” After all, it’s easy to post huge growth numbers out of the gates – it doesn’t mean that any of the top competitors actually added more customers than AWS.

Following the third quarter, Synergy again reported that Microsoft was maintaining its second-place position.

Newsflash: Starbucks is Terrible

OK, so AWS is at the top of the field. It’s the Starbucks.

Yuck. If you drink good coffee, really good coffee, Starbucks starts to taste pretty awful.

Don’t settle for mass-marketed mediocrity. Get a really good cup of cloud coffee today.

By Kent Roberts