The new cloudmance between Salesforce and Microsoft represents a stinging blow to Amazon, which only a few years ago was smothered in Salesforce affection as its one and only “preferred public cloud infrastructure provider.”
Yeah, I know, ‘the only constant is change’ and all that. But let’s put this dramatic move by Marc Benioff into the proper perspective. And then tell me if you think the nature of these changes is making Jeff Bezos and Andy Jassy feel good about their competitive posture with Microsoft.
Salesforce has just tightly aligned its three powerhouse clouds—Marketing, Sales and Service—with Microsoft. Marketing Cloud will now run on Azure—a huge win for Microsoft—and Sales Cloud and Service Cloud will now be closely integrated with Microsoft Teams collaboration solutions.
Microsoft also recently snatched the $10-billion JEDI Pentagon contract from Amazon’s grasp.
Azure’s growth rate—63% for the quarter ended Sept. 30—is dwarfing that of Amazon’s AWS unit. AWS’s 35% growth rate is terrific in a vacuum, but not so hot relative to Azure’s 63%.
Despite the silly claims of some observers who equate “cloud” with “IaaS,” Microsoft’s overall cloud business is much larger than Amazon’s AWS unit. For the quarter ended Sept. 30, Microsoft’s commercial-cloud revenue was $11.6 billion, or 29% higher than AWS’s $9 billion. (For more on that, please see #1 Microsoft Puts Amazon and Google on Notice: We’re Just Getting Started.)
Microsoft Azure has become the unquestioned favorite public-cloud infrastructure for corporations moving their huge and mission-critical SAP workloads to the cloud: SAP Rides Microsoft Deal to First $2-Billion Cloud Quarter as McDermott Era Ends.
Microsoft has even managed to forge a cloud alliance with the traditionally go-it-alone folks at Oracle: Microsoft-Oracle Shocker: Customers Win as #1 and #6 Vendors Pair Up.
Sure looks to me like the momentum, across a range of facets, is all on Microsoft’s side in the race for leadership in the Cloud Wars.
Top 10 Rankings — Nov. 11, 2019
|1. Microsoft — Q1 cloud revenue of $11.6B = 35% of company’s total revenue!|
|2. Amazon — As growth rate falls behind MSFT, will AMZN expand into SaaS?|
|3. Salesforce — Is Benioff planning to switch more databases from Oracle to AWS?|
|4. SAP —Microsoft deal drives growth as Q3 cloud revenue tops $2B for new CEOs|
|5. Oracle — Ellison: Autonomous DB growth “so extraordinary, we’re not forecasting”|
|6. Google — No Q3 cloud revenue details, but “significant growth” across the globe|
|7. IBM — Cloud + industry expertise powers huge partnership w/ Bank of America|
|8. Workday — CEO Aneel Bhusri says Oracle, SAP can’t match it in Fortune 100 mkt.|
|9. ServiceNow —Bill McDermott takes over as CEO as Q3 revenue reaches $900M|
|10. Accenture —$9B cloud business up 23% in ‘18|
At the same time, says superstar industry analyst Ray Wang of Constellation Research, it’s important to view the Salesforce deal with Microsoft as an inevitable recognition of customer-driven requirements.
“It’s an olive branch. There’s only going to be 3 huge infrastructure players so Salesforce knows it’s gotta play nice with all of them,” Wang said in a phone conversation last night.
“Salesforce knows that a lot of their customers are now on Teams, and a lot are moving to the Microsoft stack. And the main point is, customers want that integration—they’re demanding it,” Wang said.
“And this doesn’t mean Salesforce won’t also double down with Google Cloud and others. Most of our clients are in multicloud or want to go multicloud with other services up and down the stack. For Google Cloud, that’s ML, for Azure it’s Teams, and Salesforce has to be able to help its customers move along all of those.”
There’s one other big possibility that the brilliant Benioff might have up his sleeve. To keep Salesforce in good graces with AWS even as he nuzzles up with Microsoft, perhaps next week at the Dreamforce mega-event, Benioff will announce that he’s migrating his databases from Oracle to AWS. That was an intriguing possibility raised by the highly knowledgeable Jiri Kram in a recent analysis of mine called Will Salesforce Dump Oracle and Pick AWS? An Insider’s Perspective.
Disclosure: at the time of this writing, Microsoft and Oracle were clients of Evans Strategic Communications LLC.
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