The battle for cloud market share is just beginning

Cloud market will be dominated by “mega-vendors” Amazon, Microsoft, Google and VMware, researcher predicts

If you think the uber-competitive cloud computing market is hot right now, you haven’t seen anything yet.

That’s the prediction from one of the cloud industry’s leading pundits. Lydia Leong tracks the cloud market for Gartner and recently authored the IaaS Magic Quadrant, in which she found that Amazon Web Services is by far the market-share leader, with five times the amount of use than all its other competitors. That caused some in the industry, like Bernard Golden, director of enterprise solutions at Dell’s Enstratius, to ask, “why hasn’t a credible competitor emerged to challenge AWS??”

[THE CHALLENGERS: 10 Challengers who could take on Amazon in the cloud]

In a post on her personal blog, Leong responded:

“I think there’s a critical shift happening in the market right now. Three very dangerous competitors are just now entering the market — Microsoft, Google, and VMware. I think the real war for market share is just beginning.

Amazon got a head start on all the competitors and then built up a massive engineering team to quickly develop software to create differentiating features in its cloud. It has focused on building products and services that customers will actually use, which has allowed the company to keep its lead in the cloud market.

But while AWS has a strong lead, these three other vendors (Microsoft, Google and VMware) are catching up. Each have strong brand name presence to launch a market challenge to AWS, Leong notes. Microsoft has the cash and standing within the enterprise market to compete in the cloud, but its biggest strength, which is offering customers products that are all within the Microsoft ecosystem, could also be its greatest downfall. Google has the engineering talent to out-innovate anyone in the tech market, Leong notes, but it will struggle to position itself as a true enterprise-company (a stigma AWS has been fighting as well). VMware, meanwhile, has a strong hybrid cloud play and respect in the enterprise market, but has a tough balancing act to play with its service provider partners.

“If I were to place my bets, it would be on those four at the top of market share, five years from now,” Leong wrote. “They know that this is a software business. They know that innovative capabilities are vitally necessary. And they know that this has turned into a market fixated on developer productivity and business benefits. At least for now, that view is dominating the actual spending in this market.”

Senior Writer Brandon Butler covers cloud computing for Network World and NetworkWorld.com. He can be reached at BButler@nww.com and found on Twitter at @BButlerNWW.

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