Microsoft chipped away at Amazon cloud dominance in 2017, says Gartner

Microsoft chipped away at Amazon cloud dominance in 2017, says Gartner

Microsoft Corp. chipped away at Amazon.com Inc.’s dominant public-cloud position in 2017, as it showed the fastest surge in growth from any cloud provider, according to a research report released on Wednesday.

Microsoft’s MSFT, -0.15%  cloud revenue clocked in at $3.13 billion in 2017, up from $1.58 billion in 2016, a 98% jump, according to research firm Gartner, which reported on the 2017 worldwide Infrastructure-as-a-Service market on Wednesday.

That means Microsoft held 13.3% of the $23.58 billion public cloud market in 2017, up from its 8.7% share in 2016. And that momentum doesn’t appear to be abating much. In its latest quarterly earnings, Microsoft said revenue from its Azure public cloud service surged 85% from the year ago period.

On the whole, public cloud revenue rose nearly 30% from $18.21 billion in 2016, Gartner said. Amazon’s AMZN, +0.85%  share of the market — through Amazon Web Services — in 2017 slipped to 51.8% from 53.7% in 2016, as cloud revenue climbed 25% to $12.22 billion, according to Gartner.

Still, what’s impressive about the $12.22 billion figure is that AWS reported half of that in the second quarter alone. In Amazon’s latest quarterly earnings, AWS revenue surged 49% to $6.1 billion.

Rounding out the top five, Alibaba Group Holding Ltd. BABA, -1.15% remained in third place with $1.09 billion in cloud revenue, up 63% from 2016. Alphabet Inc.’s GOOG, +0.18% GOOGL, +0.47%  Google Cloud Platform revenue rose 56% to $780 million in 2017, while International Business Machines Corp. IBM, -0.98%  cloud revenue rose 54% to $457 million over that period.

“Cloud-directed IT spending now constitutes more than 20 percent of the total IT budget for organizations using cloud,” said Sid Nag, research director at Gartner, in a statement. “Many of these organizations are now using cloud to support production environments and business-critical operations.”

Amazon shares are up 52% on the year, while Microsoft shares are up nearly 24%. Alphabet shares are up nearly 16% and U.S. shares of Alibaba are up 7.4%. IBM shares are down 6.4% for the year.

By comparison, the S&P 500 index SPX, -0.12%  is up 5% for the year, while the Dow Jones Industrial Average DJIA, -0.30%  is up 2.3% and the tech-heavy Nasdaq Composite Index COMP, +0.34%  is up 11.3%.

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