Microsoft’s latest blowout quarter brings its total enterprise-cloud revenue for calendar 2019 to $44.7 billion, making its cloud business about 30% larger than the approximately $34.8 billion that I expect Amazon to report for AWS tomorrow.
Microsoft’s stellar $12.5 billion in cloud revenue for its fiscal Q2 ended Dec. 31, up 41%, should help correct the widespread but completely erroneous belief that Amazon’s AWS unit is the world leader in the cloud. (Please see Why Microsoft Is #1 in the Cloud: 10 Ways It’s Getting Bigger, Stronger, Better or any of the pieces linked below.)
AWS is a great company and had an excellent year in 2019. My comments above are not meant to diminish AWS’s performance in any way. And while AWS remains the market leader in public-cloud infrastructure, it is very clearly Microsoft and not AWS that rules the overall cloud marketplace.
By the numbers:
- For the four quarters making up calendar 2019, here are the revenue figures for Microsoft’s commercial-cloud business: $9.6 billion, $11.0 billion, $11.6 billion, $12.5 billion. Those add up to a calendar-year total of $44.7 billion. (I’m emphasizing “calendar year” because Microsoft’s fiscal year starts July 1 and ends June 30, while Amazon’s reporting cycle coincides with calendar quarters.)
- For those same four quarters, here are the corresponding figures for AWS. The first three of these numbers are actual figures; the fourth, for Q4, is my own estimate since Amazon’s results won’t be out until later today: $7.7 billion, $8.4 billion, $9.0 billion, and for Q4 my estimate of $9.7 billion. Those add up to a calendar-year total of $34.8 billion.
- Microsoft’s overall cloud revenues are indisputably larger than those for AWS. They are rising more rapidly than those for AWS. And that pattern has been building now for several quarters.
Again, there’s no question that AWS is the leader in the category it created: public-cloud IaaS. But over the past several years, the cloud has surged past that early-stage model. While businesses today are surely continuing to embrace IaaS, they see it as in many ways an efficiency play and an excellent cost-cutting approach.
Meanwhile, those same business leaders are looking to the software side of the cloud—PaaS and SaaS—as the true cloud catalysts for change, transformation, and differentiation. And because Microsoft plays aggressively at all three layers of the cloud, whereas AWS is primarily driven by IaaS, Microsoft has become #1 by delivering huge value to business customers via an end-to-end approach.
Microsoft’s approach reflects not its internal forays into the cloud—which is the case with AWS—but rather a customer-centric approach. The cloud industry might offer IaaS and PaaS and SaaS, but what business customers want and need are growth, innovation, customer intimacy, nimbleness, insights and the ability to move at the speed of their customers.
In offering perhaps the industry’s broadest set of cloud services, Microsoft is therefore able to address and often fulfill a wider range of customer needs than any other tech vendor.
That’s the strategic view—and it is 100% valid, even though it lacks quantitative precision.
So let’s go to the numbers: again, for calendar 2019, AWS will generate cloud revenue of about $34.8 billion (and we’ll have more-precise numbers later this week after Amazon releases Q4 and full-year results). Microsoft, also for calendar 2019, has delivered enterprise-cloud revenue of $44.7 billion.
That’s about 30% higher than AWS’s revenue for the comparable period.
So, for all you folks who insist that Amazon’s the cloud leader and Microsoft’s second, please tell me: in what universe is $34.8 billion bigger than $44.7 billion?
Or, absent that, tell me how it is that you feel that IaaS is “real cloud” but PaaS and SaaS are not?
Because while that fantasy might hold true inside the tech-industry bubble, it is surely a load of nonsense in the minds of business leaders spending many tens of billions of dollars on the cloud in 2020 and beyond.
Say it with me one more time: $44.7 billion is about 30% larger than #34.8 billion.
And that’s why Microsoft continues to be the unquestioned #1 in my Cloud Wars Top 10.
Top 10 Rankings — Jan. 27, 2020
|1. Microsoft — Azure reliability is top priority as Q2 cloud revenue should top $12B|
|2. Amazon — An influential survey of CIOs shows Azure is more popular than AWS|
|3. Salesforce — 20-year itch: can Benioff outflank SAP in redefining modern CRM?|
|4. SAP — Can Morgan and Klein turn Experience Management into global standard?|
|5. Oracle — Larry Ellison brawling with SAP, Amazon and Salesforce|
|6. Google — Thomas Kurian is our CEO of the Year for driving customer-first culture|
|7. IBM — Bank of America says cloud has saved billions in IT costs|
|8. Workday — Can Bhusri continue to beat SAP & Oracle for huge Fortune 100 deals?|
|9. ServiceNow — McDermott’s moonshot: triple rev. to $10B, become ‘most admired’|
|10. TBD — New addition coming soon!|
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