Why Cloud Market Share Calculations Vary by Analyst
Once a quarter, industry experts compare the revenues of cloud service providers to calculate each provider´s cloud market share. While the calculations always show that AWS is the biggest cloud service provider followed by Microsoft Azure and (usually) Google Cloud, the percentage cloud market share for each provider can vary considerably by analyst.
There are several reasons for the discrepancies. Some analysts calculate cloud market share from IaaS revenues, while others can include PaaS revenues or PaaS and SaaS revenues. Some may limit their analyses to Western Hemisphere providers, to the “Big 3” providers, or to providers relevant to their target audiences (i.e., few analysts include Huawei because of international restrictions).
The lack of consistency in cloud market share calculations can also be attributed to Microsoft and Google combining IaaS revenues with other services. Microsoft includes revenues from server products in its “Intelligent Cloud” figures, while Google includes revenues for Google Workspace in its “Google Cloud Unit” figures – making it impossible to extract accurate like-for-like revenues.
Why Revenues May be a Poor Guide to Cloud Market Share
Revenues are the only metrics analysts have to calculate cloud market share, but they can be a poor guide because revenues alone don´t reveal how many businesses are taking advantage of free tiers or committed use/spend discounts. They also don´t reveal how well business are optimizing their environments nor taking advantage of customization or auto-scaling to reduce costs.
Consequently, AWS´ cloud market share by utilization may be much higher than its cloud market share by revenue because more businesses are taking advantage of Reserved Instances and Savings Plans. Alternatively, Azure customers may be utilizing the cloud more cost-effectively by following the recommendations of tools such as the Azure Well-Architected Framework.
With regards to customization and auto-scaling, Google Cloud is the only one of the top three cloud service providers that provides the opportunity to deploy customized VM instances and reduce the potential for over-provisioning. It is also the case that Google Cloud is currently pursuing a very aggressive pricing policy, so its services may be utilized more while generating less revenue.
How Cloud Providers Achieved their Market Share
What current cloud market share calculations don´t tell you is how the leading cloud providers got to be where they are. For example, AWS is not necessarily the biggest cloud service provider because of its wide range of services and innovative products. It is more likely the case AWS owes its leading cloud market share to being first to market in 2006.
Although Google Cloud was the next of the leading cloud service providers to launch a public cloud in 2008, Microsoft Azure (launched in 2010) occupies second place in cloud market share calculations due to being specifically designed to accommodate Microsoft customers using Windows Servers. Consequently, Microsoft was able to easily cross-sell existing customers into Azure Cloud.
Google Cloud only started building a respectable cloud market share once it abandoned its policy of focusing on developer tools; while among the companies with smaller cloud market shares, IBM remains focused on the smaller private cloud market, and Alibaba Cloud has failed to make inroads into the Western Hemisphere many were predicting five years ago.
Do Cloud Market Share Calculations Matter Anyway?
If you have a workload to deploy in the cloud, it is probably not the case you will choose a cloud according to the provider´s cloud market share. You´ll likely select the cloud you are most familiar with or – if you are familiar with multiple clouds – select the cloud which is most cost-effective, which provides the best performance, and/or which is the most secure.
Determining the best cloud for cost, performance, and security can be a time-consuming process if you have to build an app for one cloud, decommission it and rebuild it for another cloud, before repeating the process for subsequent clouds and for the cloud you ultimately decide is most appropriate for the workload.
For this reason, an increasing number of businesses take advantage of cloud agnostic environment-as-a-service solutions. Quali’s solutions (Torque for public cloud infrastructure and CloudShell for on-prem or hybrid infrastructure environments) all organizations to develop, stage, and test workloads in different environments. To find out more, start a free trial.