Guess Who’s King of Cloud Revenue Growth? It’s Not Amazon or Microsoft
When it comes to revenue growth in one key cloud computing sector, the top ranking doesn’t belong to any of the big three U.S. cloud companies—Amazon, Microsoft, or Google. Instead, China’s Alibaba led the list with worldwide cloud revenue more than doubling last year.
Alibaba’s cloud sales soared 126.5% to $675 million last year from $298 million in 2015, according to market research firm Gartner. Alibaba (BABA) is a dominant force in China, but it also is ramping up its Aliyun cloud effort in North America and other markets.
Gartner’s (IT) research covers one critical cloud computing segment known to techies as “Infrastructure as a Service.” That category includes basic computing, data storage, and networking services that companies can rent as needed. This category does not include cloud-based business software, like Salesforce (CRM).
Cloud infrastructure is a very hot topic among Fortune 500 and other companies—virtually all of which are assessing whether they should run more of their business software in offsite cloud data centers instead of (or in addition to) managing more of their own data centers.
Following Alibaba in the rankings was Google, which doubled cloud revenue worldwide year-over-year to $500 million from $250 million; Microsoft Azure had 61.1% growth to nearly $1.6 billion from $980 million; and Amazon Web Services revenue grew 45.9% to nearly $9.8 billion from about $6.7 billion. Rackspace, which manages its own set of cloud infrastructure but also provides services for Google, AWS, and Microsoft products, came in fifth, with worldwide revenue growing 2.2% to $484 million from $461 million.
AWS, which pioneered this category more than a decade ago is growing off a much bigger base than the other cloud contenders. Growth typically is much harder for bigger companies.
The Gartner report shows the overall market for this type of cloud service grew 31% last year to $22.1 billion from $16.8 billion in 2015. Amazon accounts for just over 44% of the total market; Microsoft (MSFT) is second with 7.1%; while upstart Alibaba had just 3%.
Amazon (AMZN) is huge, but its growth is expected to slow because of growing competition from Azure, Google (GOOG), and Alibaba, Gartner research director Sid Nag told Fortune.