AWS, Microsoft cloud revenues surge with remote working demand

Channel analyst Canalys has reported a US$31 billion cloud infrastructure services spend increase for Q1 2020, a record 34 percent growth.

The firm identified the growth in cloud services as being driven by organisations around the world moving to remote working as the COVID-19 pandemic hit. The pandemic saw enterprise demand for compute resources quickly increase as lockdowns, remote work and social distancing measures took hold.

All major cloud providers benefitted from a jump in demand for online collaboration tools, ecommerce and consumer cloud services. 

On the flipside, big enterprise cloud migrations and transformational cloud projects waned, and demand from cloud-based hospitality and travel apps and business was also down.  

On a provider basis, AWS retained control of the market, accounting for 32 percent of the total market in the first quarter as its sales grew 33 percent. While AWS outpaced its competitors in dollar terms, Microsoft’s Azure sales grew 59 percent, taking its share to 17 percent.

Canalys reported that, in some markets, Microsoft hit capacity limits due to unprecedented use of Teams, causing Microsoft to restrict consumption on certain services and new customers. 

Google Cloud retained third place in global cloud infrastructure market share for the quarter, followed by Alibaba Cloud. Canalys said both had a 6 percent share of the total cloud infrastructure services market. Google Cloud’s data and analytics platform was popular among its key verticals including the public sector, healthcare, service providers and financial services.

Canalys chief analyst Alastair Edwards said while new and challenging customer dynamics had provided a boost to consumption, this was uncharted territory for cloud service providers. 

“Cloud has become an essential tool to support business continuity in these difficult times,” he said. “Many organisations have turned to the public cloud for its burst capabilities to meet a sudden spike in use. Platforms such as Zoom would not have been able to operate without the flexible infrastructure provided by the major cloud providers.”

The global health crisis has seen cloud providers act quickly to meet the surge in demand for their services. Microsoft added new server capacity to its data centres in the worst-affected regions, while AWS opened two new data centre regions in Cape Town and Milan in April. 

Google Cloud revealed plans to open four new cloud data centres in Asia, Canada and the Middle East. Alibaba said it would spend $US28 billion to expand its cloud business worldwide over three years.

Canalys chief analyst Matthew Ball said enterprises had been forced to rapidly change their IT infrastructure strategies to respond to the pandemic. 

“Cost reduction and protection of capital are priorities as the global economy weakens. Anything on-premises that does not improve current business continuity initiatives has taken a back seat as companies rethink budgets in the face of growing uncertainty or struggle to access physical data centres,” he said. 

“At the same time, companies around the world urgently need access to flexible compute capacity to support remote working, collaboration, online commerce and security. Cloud infrastructure is an obvious short-term solution. This has been a boon for most if not all the major players.”

Canalys said while cloud growth was evident, infrastructure providers had also been hit by slowdown in large consulting-led projects such as SAP migrations, hybrid cloud deployments and other major digital transformation projects. Cloud investment in segments such as hospitality, aviation, construction, tourism and manufacturing is in largely on hold or reduced.