The cloud is bigger than hyperscalers
Smaller providers are worthy of coverage…and scrutiny
The big three hyperscale cloud providers account for a little over 60% of the cloud market. But the chances are that you’re using at least one non-hyperscale provider as well.
Analysis of Q3 2024 data suggests that when hyperscalers are removed from the analysis, there remains approximately 39% of a market worth approximately $790 billion in play. That market is split among dozens of smaller companies. Chinese cloud giant Alibaba made the top five, with an approximate 4% share of the global market, followed by Oracle on 3%.
Salesforce, IBM, Tencent and Huawei all had an approximate 2% global market share. Then it gets really scrappy.
Hyperscale complexity
Examining market shares is only the beginning of the process. More interesting is trying to get to grips with understanding how businesses at varying stages of development are using cloud, how they’re mixing it up, and why.
Research published last year by what was then the Cloud Industry Forum (now the Tech Industry Forum) revealed a stronger than expected showing for smaller cloud providers – particularly in organisations employing less than 1,000 people.
For example, in the 50 – 249 employee SME space, 56% were using cloud services from IBM. That’s more than Azure (54%), AWS (48%) and Google Cloud (44%). Twenty-six percent were using Oracle cloud.
In companies employing 250 - 999 people, 61% were using IBM cloud services, and 41% those from Oracle. AWS and Microsoft came in at 51% and 41% respectively, and Google Cloud at 38%. In this size company, 25% of respondents were using Salesforce cloud services.
These figures don’t suggest that headline market shares are wrong, but they do add some interesting detail to the picture of the AWS and Azure duopoly controlling half the market, with Google consolidating its 11% share.
David Terrar, CEO of Tech Industry Forum (TIF), has some insight into these numbers. He acknowledges that the findings look anomalous compared with previous years, but also thinks it might be indicative of interesting developments in terms of multi and hybrid cloud.
“I think it is saying something in terms of both IBM and Oracle getting more market share and being more active in cloud services alongside the big three.
“My gut feel is that the complexity of the big three and their platforms, where there are so many features and functions, are driving companies into looking at other options. It doesn't surprise me that IBM and Oracle are coming into that, along with others like OVH Cloud and Lenovo. There are sensible alternatives available.”
The TIF research aligns to some extent with that carried out by Computing over the last decade, which has consistently found a hybrid cloud strategy to be the most popular. Clearly, not every workload belongs in a hyperscale cloud. Concerns about lock-in are often given as a reason for developing a more blended strategy, but it’s one factor of many, says Terrar.
“Forty-nine percent of the respondents this year had a cloud first strategy and 49% had a hybrid. For me, that makes sense because it's all about the particular characteristics that you're after.
“Maybe you develop using OpenStack or a similar approach, whereby you can easily migrate from one platform to another, but lock-in in in its various forms has always been there. I don't see that as a big thing to be worried about. It's more a matter of choosing the right platform for the particular work.”
Increasing importance of ESG
How important is ESG and sustainability when making cloud purchasing decisions? And who is it important to? According to the TIF research, 84% of those employing between 50 and 249 people said it was extremely or very important. That figure rose to 94% in the 250 – 999 category and 63% of those said they would reject a prospective cloud vendor based on a poor response to questions on ESG or sustainability.
Ultimately, sustainability ranks about mid-table in terms of importance when compared to factors like costs, services available, relationship etc. but the research suggests that overall, cloud sustainability matters.
It also seems to matter more to progressively smaller organisations. We’ve expected the Fortune 500 type businesses to report ESG data for some years now, but the expectation that mid-market enterprise wouldn’t or didn’t need to be as engaged is starting to change.
“It's much higher in the buyers’ mind than you might expect,” says Terrar. “The realisation that sustainability is crucially important is one of the strongest things that comes out of the report, and I'm hoping that companies do start to report more on ESG.”
Terrar’s point of view and the research informing it chimes with Computing research into tech purchasing, which found last year that sustainability remains in the top three priorities of those making the decisions. Indeed, it is the calls for better quality and more comparable data that led to Computing making sustainability one of our key areas of research.
For the last two years, research has focused solely on the big three. This year, our research will evolve again and whilst we intend to report on the progress of the big three in key areas such as carbon emissions, water use and circular economy we will also find a way to include Oracle, Salesforce, IBM and OVH Cloud within the analysis.