As Amazon, Microsoft and Google Keep Taking Cloud Share, Rivals Are Learning to Specialize

The 2016 edition of the Magic Quadrant report on cloud infrastructure (IaaS) by research firm Gartner made it clear that Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT) and to a lesser extent Alphabet Inc./Google (GOOGL) They were ahead of the group in the growing IaaS market, and are unlikely to give up their leadership.

This year's version does not represent a significantly different picture with respect to the competitive positions of the big-3. But it does suggest that smaller rivals are getting better at building niches by focusing on cloud bids that stand a chance of standing out.

For those unfamiliar: Gartner places the companies it covers on a Magic Quadrant report in one of the four quadrants on a chart. Where they are placed depends on how highly Gartner qualifies its execution capacity within a market, and how complete the company considers a company's vision for its offers within the market.

Those considered above the mean in both fields are placed in the "Leaders" quadrant, and those that are seen as below average in both in the "niche players" quadrant. Those that are considered above the average in one and below the average in the other are placed in the quadrant "Visionaries" or "Challengers".

As shown above, Amazon and Microsoft are well within the Leaders quadrant, and Google is about to break. The three companies saw their placement on the "Ability to Execute" axis slightly up from 2016, previously on the "Integrity of Vision" axis.

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But while Google was alone in the Challengers quadrant last year - all but the big-3 was labeled Niche Player - Alibaba Group (BABA), IBM Corp. (Oracle) and Oracle Corp. (ORCL) Quadrant this year. Part of this may be due to a more lenient attitude towards the smaller players' ranking by Gartner. But you could also say a thing or two about how each company has learned to stand out.

Alibaba, which reported its "cloud computing" revenue, rose 103 percent a year in the March quarter to RMB2.16 million ($ 314 million), was praised for its leadership position in the growing IaaS market in China . Although Amazon Web Services (AWS) and Microsoft Azure have entered China, Gartner notes that Alibaba's AliCloud remains popular among technology companies and Chinese government agencies. And that AliCloud has developed a strong ecosystem of local software companies and managed service providers (MSP).

At the same time, Gartner notes that Alibaba's international cloud offerings, launched last year, are quite limited. And that potential international customers could still have security and compliance concerns over dependence on a provider of the Chinese public cloud.

The IBM ranking appears to have gained momentum from its efforts to create a next-generation cloud infrastructure for enterprises that builds on IBM-owned hardware and software management. Gartner also noted IBM's ability to use its global presence to set up cloud data centers in 16 countries and the ability to use its developer ecosystem to drive the adoption of infrastructure services built on its Bluemix (PaaS) platform, For developers.

However, Gartner added that IBM's current infrastructure offerings were developed by its SoftLayer unit (acquired in 2013) - have seen limited improvements over the last four years and are considered by Gartner to be more suitable for emerging and gaming companies than big enterprises . The firm also believes that IBM's current cloud experience is "unrelated" as some services are offered through Bluemix and others through SoftLayer.

Oracle is praised for the new IaaS platform launched last year, which includes support for bare metal servers without virtualization software, and for having a "sensible engineering map" to compensate for lost terrain. Gartner also likes Oracle to have an end-to-end cloud strategy that covers IaaS, PaaS and cloud applications (SaaS), a large ecosystem of developers and the ability to use its database to encode into clients.

But while Larry Ellison might argue otherwise, Gartner sees Oracle's IaaS platform as a "viable minimum product" at the moment, lacking the advanced features that larger rivals in this field can offer. Oracle adds that it has just begun to create an ecosystem of infrastructure partners in the cloud, and warns customers to be wary of "high-pressure sales tactics" designed to drive cloud transactions.

The Dell Technologies Virtustream (DVMT) cloud unit, acquired when the company bought EMC last year, is still in the Niche Players segment, but is now close to crossing the Visionaries segment. Gartner notes that Virtustream does a good job of running mission-critical business applications such as SAP and Oracle, and is expanding the number of regions and workloads it serves. But he warns that Virtustream is (with good reason) focused on its mission-critical business niche rather than trying to deliver a broader set of services.

While the smaller players get some praise in the Gartner report, it still pales in relation to what is shown for the big-3. Not surprisingly, AWS is the "leader of thought [IaaS] and benchmark for all competitors," and the most frequently chosen platform for large-scale migrations of data centers. Amazon's unrivaled ecosystem of software and consulting partners also get a scream-out, and Gartner points out that many companies are spending more than $ 5 million a year on AWS, which has achieved a revenue rate of $ 14 million.

Gartner annuls the Azure execution rate (never reported by Microsoft) to around $ 3 billion by the end of 2016, with a few customers now spending more than $ 5 million a year. He points out that Microsoft is accelerating the pace it launches new features of the cloud, has come with open source developers and is very popular among companies that have extensively implemented Microsoft server software on the premises. One point of criticism: Microsoft's support services might be better.

Google's ability to provide cloud customers with technologies and software tools developed to support their consumer services is considered a strong point; Last year, Gartner talked about Google's analytics and analysis services. The web giant is also said to have greatly improved its ability to sell to businesses over the past year. However, Gartner adds that its customers often choose Google as a secondary cloud provider rather than the primary provider, and that its feature set is still not as broad as Amazon and Microsoft.

A January Morgan Stanley survey found that, on average, CIOs expect the percentage of all enterprise application workloads to run in public clouds to grow from 16% to 46% by the end of 2020. Amazon, Microsoft And Google Clouds will claim a large portion of those migrated workloads, but as the Gartner commentary drives home, there are ways for smaller rivals to claim a share of them if they are able to differentiate themselves and resist the urge to try to build A true rival to AWS.

For companies like IBM, Oracle and Dell, creating profitable small-scale cloud infrastructure businesses, even with other cloud computing offerings on top, could be cold comfort - these companies need significant cloud growth to offset the Decrease in hardware, software and traditional IT services Income streams. But ultimately, this is a better result than losing money in a vain attempt to totally what the game Amazon or Microsoft is doing.