Cloud computing wars enter new phase

Three of the world's most well-known companies are engaged in a ferocious battle for control of cloud computing. Estimated to be worth about a trillion dollars, Amazon, Microsoft and Google are battling it out, hoping to dominate the cloud business.

JP Morgan has just released a paper, pointing out that the cloud computing wars are entering a new phase. The 50-page note, based on a survey of CIOs, reveals that the public cloud accounts for 16.2 per cent of all enterprise workloads at present. The CIOs expect this to nearly triple in about five years.

The JP Morgan analysts say Amazon Web Services (AWS), which has had an early lead, will gain substantially, but will have to fiercely resist attempts by Microsoft Azure to dethrone it. There are also dire implications for many companies like Oracle and SAP and other traditional IT vendors.

AWS is the leader in cloud computing, with revenues of $8 billion, as compared to $1.1 billion for Microsoft and $500 million for Google. However, the survey of 207 CIOs of companies came out with some 'shocking findings,' say the analysts.

''We believe the most fascinating takeaways appear in the re-ranking of the rest of the list,'' said the JP Morgan analysts. ''First, AWS's appearance in the number two position signals a potentially momentous changing of the guard, in our opinion, and is telling of its ROI, appeal to and influence of IT professionals. AWS's ranking sends a strong indication that threats to traditional, on-premise IT infrastructure vendors are serious.''

When asked, 'Which IT mega-vendor will be most critical and indispensable to your organization's IT environment in the future, and why?' the CIOs ranked Microsoft Azure at the top, with AWS trailing way behind at number two.

But many of the CIOs described AWS as ''a transformative power whose impacts will be felt in technology, process, development, etc.'' They also felt a lot of IT assets would be migrating to AWS over the next 12 months or so.

Initially, when cloud computing was launched many business enterprises were hesitant about putting confidential data on servers owned by another company. But today, the cloud is being seen as far more secure than any other server.

AWS started the cloud revolution about 10 years ago to place the enormous data it had about its online shoppers. Later, it began extending its online infrastructure to external developers. Its enterprise software business is expected to grow by 50 per cent this year.

Microsoft, which has been selling software to businesses for several decades, also forayed into cloud computing, which was once headed by its current CEO Satya Nadella. Microsoft's cloud business grew by a whopping 140 per cent last year.

Google, which basically invented cloud computing by building large data centres to run its search engines (and later Gmail and Google Maps), was late in offering its cloud to other companies. But last year it hired VMware founder Diane Greene to run its enterprise business. Google recently tied up with two rivals, Spotify and Apple, as its cloud clients.

Cloud services allow businesses to save on expensive servers and other IT infrastructure, as they can transfer all their data to the cloud services (or data centres) maintained by IT companies like AWS, Microsoft or Google.

Sundar Pichai, the CEO of Google, told a summit recently, ''We believe that in the future, almost everything will be done in the cloud, because it's a better way of doing business. We are at the beginning of what's possible; businesses are just starting to adopt the concept and we are set up with the right people at the right time. We're seeing a real acceleration in customers choosing us.''

Interestingly, the JP Morgan survey revealed that former industry giants are lagging behind in the perception of CIOs. IBM, for instance, topped the list of losers, with 26.1 per cent of respondents stating it would be the number one loser. Second was HP, followed by Oracle, Dell and EMC.

Legacy vendors like them are most vulnerable as corporates gravitate to next-generation cloud platforms. ''IBM, HP, and Oracle are the top 3 most at-risk vendors for losing share of IT budget as the world shifts workloads to IaaS -(infrastructure as a service) vendors,'' said the analysts.