Australia has a hyperscaler "oligopoly"

As cloud technology becomes the defacto lever for transformation across enterprises, a two tiered cabal has emerged in the Australian market according to ISG Research.

The current cloud competitive field has created two distinct markets, with their own distinct operating models.

First, there is the hyperscaler market; then, service providers that support client investments in the hyperscalers.

The new report by ISG Provider Lens Public Cloud — Solutions and Services for Australia has Amazon Web Services (AWS), Microsoft Azure (Azure) and Google Cloud Platform (GCP) as the top three hyperscalers with no challengers from Australia or elsewhere on the horizon.

AWS, Azure and GCP lead the space, and have shaped the market as an oligopoly, all without any innovation pressure on them.

“The competitive tension between the three hyperscalers borders on the extreme, with each of them competing in terms of product, cost, ease of use and many other measures, including sustainability.”

ISG posits that the accelerated innovation makes it difficult to track for customers and partners.

“Cloud computing dominates both technology and business in Australia, as it does in most regions,” Ben Rossiter, technology modernisation lead for ISG in Australia said.

“After years of evolution, the cloud is now at the centre of enterprise digital transformations.”

The report found that geography is increasingly important as the location from where services are delivered is becomes a hotbed of competition. 

“All leading hyperscalers have  invested in Australia," ISG said.

"These three providers and their respective carriers and data centre providers have worked on increasing their bandwidth and eliminating the redundancy issue, while aggressively expanding their footprint in the existing locations by spreading across multiple sites," the research found.

In the current geopolitical environment, China-based cloud providers are not likely to become major players in Australia soon, the report says.

The report has found that the market has matured to the extent that customers do not buy from a single public cloud provider and contends that it is best practice to have a hybrid could approach across both public and private cloud solutions, in order to optimise investments covering specific workloads, data, security and governance requirements.

Cloud services are becoming especially critical to Australian enterprises that face challenges in maintaining critical SAP workloads, ISG says.

High costs, data-handling issues, skills shortages and change management have led many organisations to implement cloud-based SAP HANA solutions, often engaging with hyperscale providers to address these issues.

The research finds that while all the hyperscaler cloud platforms attempt to outbid each other on their sustainability pitches, they do eventually assist organisations to achieve their sustainability goals.

All three providers have reported that their environmental performance has, over the past year, become a key consideration for enterprises looking to migrate from on-premises data centres to the public cloud.

The report contends that despite massive increases in computing power, hyperscalers’ data centres “have achieved remarkable improvements in energy efficiency over the past decade.”

Additionally cloud providers are actively creating workspace solutions to support remote and hybrid working, which has flow on positive environmental impacts via limiting travel and saving on office resource cost and energy expenditure.