A little over two years ago, I wrote about the ongoing cloud wars with all of the 800lb gorillas in the room jockeying for position. At the time, IBM and Amazon were having what equated to a public cage match battle over a cloud contract with the CIA (IBM Steps back from CIA deal) as well as various ad blitzes, including IBM running ads on buses in Las Vegas during Amazon's premier re:Invent conference. Meanwhile, Gartner released their magic quadrant report on Infrastructure as a Service (IaaS), describing the market as still evolving and maturing. They placed Amazon AWS and Microsoft Azure both high in the Leaders quadrant, with Amazon dominating the space. Gartner had many vendors in the Visionary quadrant (including IBM, Verizon, and Google), with most others (HP) relegated to the Niche Players quadrant.
I posed the question then as to who would still be standing in two years. Well, Gartner just released their latest magic quadrant for IaaS, so it's time to revisit the discussion.
The Market has Consolidated
This is the opening statement in the summary of Gartner's latest report. This is a change from previous years when Gartner described the space as "still maturing and rapidly evolving." One thing that has remained the same since then is the dominance of Amazon AWS and Microsoft Azure. They have remained as the only two vendors in the Leaders quadrant. Amazon continues to be the dominant player. Back in the day, the saying was "Nobody got fired for buying IBM." In today's cloud marketplace, it is safe to say Amazon has achieved that level of confidence. As Gartner puts it: "AWS is the provider most commonly chosen for strategic, organization-wide adoption."
That said, Microsoft has not been sitting still. They have been making huge inroads and achieving significant growth against AWS. They have been consistently rolling out new features and services to help provide differentiation. This goes beyond the Infrastructure as a Service, which can be quite attractive for customers looking beyond just migrating workload to the cloud. Another strength is obvious. They are Microsoft. As Gartner states, "Azure is frequently chosen for strategic adoption by organizations with a strong commitment to Microsoft technologies."
IBM Relegated to the Niche Player Quadrant
After spending two years in the Visionary quadrant, Gartner moved IBM into the Niche Player quadrant this year. For the original 800lb gorilla to be referred to as a Niche Player shows the marketplace's volatility. It should be noted that the Gartner perspective is only on the IBM SoftLayer offering, an acquisition IBM made in 2014 to help jump start their cloud business and data center platform presence. Even with this shift, I would not count IBM out of the cloud wars just yet. IBM has battled many other disruptive competitors — a fact I am well aware of being a former employee of Digital Equipment Corporation (DEC). DEC rose in the 1960s, disrupting the mainframe computing industry with a game changingconcept, the mini-computer. DEC eventually rose to being the No. 2 computer manufacturer in the world (behind IBM). DEC is now a fond memory, as it was since acquired by Compaq (a PC manufacturer) who was later acquired by Hewlett-Packard. IBM putting you in their sights is not to be taken lightly, and they are taking the cloud very seriously.
Google Is the Only Vendor Left in the Visionary Quadrant
Two years ago, there were several vendors in the Visionary quadrant. IBM (as mentioned above), CSC and Verizon to name a few. The only vendor left standing in that quadrant now is Google. Google's play is to let your businesses "run like Google" by exposing their internal technology services to customers. Google has pioneered scaling infrastructure, container usage, and big data. According to Gartner, Google is "leveraging its expertise and experience with big data in its own consumer business in order to build product strength in technologies such as analytics and machine learning." While they are not the automatic "go to" vendor when thinking about public cloud, they do provide capabilities that can significantly add value to the business.
Others Have Gone by the Wayside
Meanwhile, other vendors have disappeared from the quadrant completely. Some small niche players, but several of the 800lb gorillas have left the room as well. Hewlett-Packard abruptly left the public cloud space back in October. Verizon's attempt to enter the marketplace two years ago with its acquisition of Terramark is seen by many as a disaster. About a decade ago, I read The Rule of Three: Surviving and Thriving In Competitive Markets. The authors, Jagdish Sheth and Rajendra Sisodia, discuss how mature markets and industries tend to evolve into two major segments:
- Generalists who service the largest portion of the customer base.
- Specialists who provide niche capabilities for customers at both the high and low end of the markets.
The cloud IaaS marketplace definitely seems to be migrating in that direction in many ways.
We Live in Interesting Times
There is a common phrase often attributed as a Chinese proverb (or curse): "May you live in interesting times."
For those following the cloud technology space, we are definitely living in interesting times. While there has been some shake out and a level of stabilization in the cloud marketplace, we should still take nothing for granted. In the rapidly changing technology environments we work in today, new disruptions could appear that re-shuffle the deck and change players' positions. A key thought for us as technologists is to remember that the technology is not the destination, it's the vehicle to get to the true destination: providing business value. This holds true for cloud. There is no one size fits all. As technologists, it is our responsibility to look at all variables to determine the right vehicle (and vendor) for our clients. One thing is for sure, this journey will not be boring!