Cloud Comparison - Part-3: Business Strategy - Get Set Go

All businesses formulate their strategies around their strengths and use partnerships and collaborations to bridge the gaps. The three cloud hyperscalars we are talking about – AWS, Azure, and GCP – also follow a similar approach. 

Before we go into details about these three players, let me list the main segments of the cloud market.

The cloud market is divided into 3 sets of solutions:

1. IaaS (Storage, Compute, Network)

• Public IaaS – This is the segment with ~$100B market and AWS commands around 55% of the market, followed by Microsoft (30%), Google (10%)
• Private IaaS (On-premise) – This is a sub-segment within IaaS driven by clients' demand for hybrid cloud solutions. Overall market size is ~$25B led by Microsoft Azure Stack (33%), Google Cloud Anthos (25%), AWS Outposts (15%)
• Overall IaaS market is led by AWS with more than half of the market share.

* Please note, that all numbers mentioned here are approximates and based on the reports published by Gartner and TBRi. The purpose is not to focus on actual numbers but to get an idea of cloud market fragmentation among three large players.

2. PaaS (Environments ready to deploy applications; very limited control on Storage, Compute, Network)

• Public PaaS – This is the next segment with a size of $80B. Microsoft, with ~33% of the market, leads the pack. AWS commands ~16% and Google cloud ~10% of the market.
• Private PaaS – With the PaaS solutions deployed on-premise, this segment gets ~$15B market, and Microsoft has a lead over others.
• Overall the PaaS market is led by Microsoft with ~35% of the market. 

3. SaaS & COTS (On-prem as well as cloud solutions including ERP, CRM, Databases, BI, HR, and marketing solutions)

• This is a highly fragmented segment with a size of ~200B. Here Microsoft has been a traditional leader for a long time. With its 365 and power platforms, Microsoft commands over 35% of the market. While SAP and Salesforce may claim second and third positions, AWS and GCP are not very big players in this segment.

So while AWS has a huge lead over others in IaaS, Microsoft is the leader in all other segments and catching fast in the rapidly commoditizing IaaS segment because of its end-to-end solution proposition.

If we look at their overall positioning, both AWS and Azure are positioning themselves as a one-stop shop for all of their client needs. Google Cloud has deliberately closed a few doors for itself so to ensure it can focus on the things that matter most to its target set of customers.

Moreover, as the cloud is becoming synonymous with IaaS, what once used to be said about IBM, is now being said about AWS – No CIO is going to be fired for choosing AWS. AWS has become a default choice for the cloud, particularly IaaS, even more so when organizations don’t have a specific set of criteria to find the best platform for their needs.

Although all three are trying similar levers to grow, such as Cloud Migration Discounts, Partner Programs to promote channel sales, and Joint GTM with System Integrators, there are also nuanced differences in how they navigate through this fragmented market.

In the table above, I summarize key strategic aspects that have defined AWS, Azure, and GCP’s journey in terms of how they started their offerings, how they are building the landscape, and how they are growing their footprint in the global cloud market.

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