Amazon.com may currently be the biggest provider of Cloud infrastructure services, as measured by sales, but one company is poised to make a substantial dent in its market position: Microsoft.
In the last 12 months, Microsoft MSFT, +1.18%[1] has experienced a 3-percentage-point gain in market share to 13%[2] — the most substantial of any of the big five Cloud infrastructure service providers — while Amazon’s AMZN, +0.98%[3] market share has held steady at 33%, according to Syngery Research[4].
Coupled with Microsoft’s 56% year-over-year growth in its commercial Cloud business, Microsoft’s bet on the Cloud is paying off. That is great news for investors looking for strong bets among technology and Cloud providers.
I see four core reasons why Microsoft is well positioned for continued growth in the Cloud space: market growth, product positioning, service adoption, and leadership.
Market growth: I believe Microsoft is gaining momentum and will continue to gain market share, not just from Amazon but potentially from other competitors as well, including Alphabet’s Google GOOG, +2.74%[5] GOOGL, +2.87%[6]
Product positioning: Microsoft is much more focused on the enterprise than Google and Amazon. Its Intelligent Cloud business is made up of its Azure Cloud Infrastructure, which is similar to Amazon’s AWS[7], and its well-known Office 365 suite. Both Google and Amazon’s core businesses are consumer-focused, although their Cloud businesses certainly have plenty of enterprise customers.
Read: Fitbit bets on Google Cloud in bid to gain appeal with health systems[8]
Here is why this is important: Given the anticipated growth of the Internet of Things[9], Computing at the Edge, and the deployment of 5G networks and technologies[10], demands on data centers are certain to grow substantially over the next few years, meaning that enterprises will need to make larger investments in the Cloud in order to support data, workloads and applications that require large amounts of computing power. This is an opportunity for which Microsoft is perhaps better positioned than other Cloud infrastructure providers.
One of the best indicators of Microsoft’s impressive footprint in the enterprise can be found in the company’s own market data, which claims that the Microsoft Cloud is the most compliant (more than 70 compliance offerings...