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Microsoft's Cloud Growth Putting Pressure on Amazon

Despite maintaining its healthy lead in the cloud infrastructure services market, Amazon Web Services is facing increasingly strong competition from Microsoft Azure.

That's the upshot of the latest quarterly research report from Canalys, which puts Azure's growth rate at 93 percent, dwarfing AWS' growth rate of 43 percent. Trailing the top two are Google and IBM, with year-over-year growth rates of 74 percent and 38 percent, respectively.

AWS' share of the cloud infrastructure services market was 31 percent in the first quarter of 2017, according to Canalys. While that's down slightly from the 33.8 percent reported in the Q4 2016 report, AWS still has more than double the market share value of its primary competitor, Azure.

In the competition for enterprise customers, cloud providers are looking to the channel to expand their reach, Canalys said.

Azure chases AWS. (Source: Canalys)

"AWS has an established channel program that is growing and is cited by the company as helping to win key global clients," the company said. "Microsoft's growth in Q1 2017 demonstrates the benefit of having a huge enterprise client base and converting it to Azure. Many of the leading enterprise vendors are building on Azure Stack, Microsoft's latest cloud initiative, to provide customers with hybrid solutions."

The overall cloud infrastructure services market grew by 42 percent year-over-year in Q1 2017, Canalys said, up from the 49 percent reported for Q4 2016.

"Go-to-market strategy, including both customer and channel partner engagement, will ultimately determine vendor success in this segment," said Canalys analyst Jordan De Leon. "Larger enterprises will adopt a multi-cloud strategy to distribute risk. Ultimately, to challenge AWS, vendors will need deep financial resources to continue to participate and advance."

Several cloud market research studies, including this one published last month by Gartner Inc., have indicated the cloud market is becoming somewhat of a two-horse race, with Azure gaining ground in some customer segments while exhibiting a faster growth rate, though it's still far behind in total market share.

About the Author

David Ramel is the editor of Visual Studio Magazine.