Azure is Catching AWS

Yet Azure unlikely to match AWS within the next five years.

Microsoft has again topped the $1 trillion market cap as it predicts more cloud growth. Azure’s star is still shining.

Azure, Microsoft’s flagship cloud product, competes with market leader Amazon Web Services (AWS) to provide computing power to businesses.

Azure is closing the gap with Amazon’s AWS, a Credit Suisse analyst recently suggested, citing a report that suggests the rising adoption of Microsoft’s cloud computing service. The numbers would seem to support the idea.

According to Flexera’s RightScale 2019 State of the Cloud Report, Microsoft Azure is closing the gap in market adoption with Amazon Web Services (AWS).

Just as Google Home devices are making headway in Alexa’s market lead in smart home penetration, Azure’s strong growth could be taking market share away from AWS.

Microsoft’s cloud service Azure has grown 73% in the first quarter of 2019. This is a much faster pace than in 2018.

There’s increasing evidence Azure continues to catch up with AWS overall especially among enterprises. Microsoft’s focus on cybersecurity and strong enterprise partnerships gives it a boost, even as AWS has deeper features and bigger contracts.

Microsoft’s stock has gained about 23% so far in 2019 and Microsoft’s business model centered around Azure looks stronger than in recent years.

Amazon and Microsoft, the №1 and №2 public cloud providers, are essentially a duopoly in the Cloud, much as Google and Facebook are an advertising duopoly. While Amazon is likely the 3rd horseman in Advertising for the future, Google is certainly the 3rd player in the Cloud. Meanwhile it’s not yet clear who the Cloud leaders will be in China, although Alibaba and Huawei (above Tencent) are likely winners there.

It’s not even that AWS is really under threat by Azure, it’s just a tribute to how pivotal the Cloud is to the enterprise sector.

The Cloud Sector is heating up as demand sky rockets.

Let’s not kid ourselves. AWS had $25.7 billion in revenue in 2018. Azure won’t catch AWS any time soon, but Azure’s strong growth along with Google’s shows the Cloud is continuing to evolve and thrive as we approach the 4th industrial revolution.

Cloud computing is driving IT spending overall. For instance, Gartner predicts that 2019 global IT spending will increase 3.2 percent to $3.76 trillion with as-a-service models fueling everything from data center spending to enterprise software.

Microsoft Azure is a very attractive option for companies with a pre-existing reliance on Microsoft products. In the long term Amazon should probably spin-off AWS as its own separate entity to keep growing and differentiating. Azure is not a 5-year threat to AWS, but in 2019 it could grow much faster. Amazon’s guidance overall is not expected to be as healthy as Microsoft’s.

With Microsoft already a very enterprise-friendly and increasingly neutral party, some analysts see Microsoft as an existential long-term threat to AWS, that will, within the next decade, take a majority or at least overtake sole position as leader of the enterprise cloud services market.

Do you agree that Azure could overtake AWS?