Who was the monarch of the cloud in 2017? What do the cloud vendor results tell us about 2017? According to the results from Cleveland Research, cloud vendors reported a banner year: an increase of 48% year over year. These overall results are on the high end of the expected 40%–50%; they came in totaling $38.6 billion. The fourth quarter of 2017 had an accelerated growth of 50%, an overall increase four percentage points higher than the prior quarter, which came in at 46% growth.
Cloud space capital expenditures (CapEx), a measure of how much money was spent on hardware and infrastructure, totaled $39.5 billion in 2017, which was a 24% increase over expenditures in 2016, and 2016 was a 19% increase over 2015. It is interesting and worth mentioning that Google, Amazon, and Microsoft accounted for 79% of the total CapEx spending.
The basis point (BPS) is defined by Investopedia as a common unit of measure for interest rates and other percentages used in finance. One basis point is equal to 1/100th of 1% (0.01%, or 0.0001). Basis points are used to indicate the percentage change in a financial instrument. Microsoft Azure and Google Cloud Platform (GCP) are reported as being the biggest share gainers, with Azure reporting +400 BPS and GCP +200 BPS. Amazon AWS continues its share dominance with 45% of the market space.
Google had a good year in 2017, to say the least, and has revealed that its cloud business is now running at a $1 billion a quarter run rate when including G Suite and GCP together. GCP is now viewed as the fastest growing cloud provider of 2017. Google will be a cloud company to keep an eye on in 2018.
When it comes to cloud innovation, Amazon is clearly maintaining its title as the industry leader. It announced 1,430 new features in 2017. That in itself is an increase of 40% year over year. To top that impressive feat, Amazon has also witnessed a 100% growth in databases migrated to its services.
Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) highlights for 2017 are also looking quite impressive. The fourth quarter of 2017 revised benchmark totals $10.8 billion, a 50% increase year over year and a 46% increase over the prior quarter. Breaking that down by provider (all had revised totals), Amazon AWS reported totals of $5.1 billion, a 45% increase year over year. This was a three-percentage-point increase over the previous quarter, which had an increase of 42%. It also had a market share decrease of 200 BPS year over year. Microsoft Azure reported totals of around $1.8 billion, which is an impressive increase of 98% year over year and a solid increase over the 90% reported in the previous quarter. That impressive growth brings up Azure market share by 400 BPS year over year. These are clearly the market leaders at the end of 2017.
Although they are not quite playing in the same ballpark as the market leaders, a few others are worth mentioning. Alibaba Cloud, which is also China’s main provider, had reported totals of $600 million, an increase of 117% year over year, which is very impressive. The previous quarter also also saw an increase of 100% year over year. Can Alibaba break free outside of China? That remains to be seen, but its financials are moving it forward bit by bit. Close behind Alibaba is IBM SoftLayer/Bluemix, which had reported revenue of $500 million, an increase of 27% year over year, slightly down from the 20% increase that was reported the previous quarter; however, it shows signs of a strong end market and growing interest in the platform. Oracle is reporting in just behind IBM with reported revenue of $400 million. That $400 million represents a 21% increase year over year, slightly down from the 29% increase reported in the previous quarter. It is being reported that delays in the Cloud Machine rollout are affecting growth for Oracle. We will just have to see how 2018 plays out for the Oracle machine.
Clearly Amazon ruled the IaaS and PaaS portion of the cloud market in 2017. Now it’s time to wait and see how 2018 turns out.