The real reason behind the stupendous growth of US Tech companies – Cloud

Amazon was hardly making operating profits till 2008, Microsoft had stagnated in sales in so called ‘lost decade’ and Salesforce, Adobe were all going through a tepid lean patch till 2015. What has transpired since 2015 with these tech companies and more exuding astounding growth? We can definitely attribute the growth reasons to the spending in Cloud & Mobile adoption by all businesses.

Cloud adoption has proliferated across array of application segments entailing software platforms, CRM, SaaS for business, ERP and Infrastructure migrations. With the advent of serverless computing, AI Devices and containerization, cloud adoption is going to gain more traction in next couple of years. Microsoft`s Satya Nadella released their future of computing as “Intelligent Cloud and Intelligent Edge” amalgamating cloud, AI and Quantum computing. Amazon with its largest wallet share in Cloud business has already manifested its Serverless architecture called Lambda. AWS Lambda lets you run code without provisioning or managing servers. You pay only for the compute time you consume – there is no charge when your code is not running. Azure has also ventured into serverless computing. This will help AWS and Azure garner even more market share in future. Though Google was late in the game in cloud business, they have really caught up in last couple of years with AWS and Azure. Google`s opensource architecture really has helped company find its real niche in cloud space. The acquisition of Kubernetes was spot-on strategically and not to mention Google language (Go lang) is fast gaining mindshare among developers.

SaaS (Software as service) subscription is a model in which software is licensed on a subscription basis and is cloud hosted. While Amazon, Microsoft has greatly rode the way in Platform as a Service and Infrastructure as a Service models, the likes of Salesforce and Adobe (Experience and Creative Cloud) has benefited immensely through the SaaS subscription based services model. Another interesting trend fast developing is adoption of Hybrid cloud that uses both private (On-Premise) and public cloud combinations. This is especially used by financial firms where the data security and personal identity protection are critical. Microsoft is the definitely the leader in Hybrid cloud business.

Another segment in cloud business is the sprawling Digital infrastructure and data center growth driven by huge demand for storage and computing to enable rapid deployment of workloads. Gartner predicts that by 2025, 80% of enterprises will have shut down their traditional data center, versus 10% today. The emergence of distributed IT and edge computing saw an increase in the number of data centers being used. Furthermore, data centers are being deployed with advanced infrastructure like Convergence. Datacenter as a revenue service based providers is a business segment itself for many players in the industry

Here is the analysis I did by delving deep to bring out a comparison between AWS, Azure, Google Cloud and Alibaba Cloud. This analysis is carried out from an Investing standpoint and will help in deciding which company to choose to ride the cloud and digital wave.

Cloud Business anaysis 1Cloud Business anaysis 2Cloud Business anaysis 3Cloud Business anaysis 4Cloud Business anaysis 5

Gartner has forecasted total Global public cloud service revenue forecast in billions of US dollars in the table below.

2017

2018

2019

2020

2021

Cloud Business Process Services (BPaaS)

42.6

46.4

50.1

54.1

58.4

Cloud Application Infrastructure Services (PaaS)

11.9

15.0

18.6

22.7

27.3

Cloud Application Services (SaaS)

60.2

73.6

87.2

101.9

117.1

Cloud Management and Security Services

8.7

10.5

12.3

14.1

16.1

Cloud System Infrastructure Services (IaaS)

30.0

40.8

52.9

67.4

83.5

Total Market

153.5

186.4

221.1

260.2

302.5

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Source: Gartner (April 2018)

Based on the analysis and the growth potential, there is still runway of growth ahead for Cloud, Subscription based and Applications as Services oriented businesses. And cloud adoption in other parts of the world has just started and there is still long way to go.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s