For some time, the signs have been there for vendors of Infrastructure as a Service (IaaS), but Gartner Inc.’s new research confirms that it is.
Gartner stated in a Wednesday research note that “By 2019, 90% of native cloud IaaS provider will be forced out this market by Amazon Web Services (AWS-Microsoft duopoly.”
AWS has been the dominant platform in public cloud market for years, while Microsoft has been steadily consolidating its No. Gartner’s conclusion that AWS has been No. 2 in the public cloud market for the past few years, outpacing IBM, Google and Oracle is not surprising.
According to the firm, AWS and Microsoft both “significantly” increased their cloud businesses in 2013 while other players are “slipping back in comparison.” Gartner also stated that they have an edge over their competitors in terms compute power, pricing, and services.
This is bad news for IaaS vendors in mature markets. It effectively makes it a two-horse race with Azure and AWS. Gartner acknowledges that vendors located in developing markets where neither AWS or Azure are as established could still be a challenge. Gartner cites Aliyun, a cloud computing subsidiary of Chinese ecommerce giant Alibaba, to illustrate a viable contender.
Gartner sees the AWS/Azure duopoly being a double-edged blade for organizations. While they may initially benefit by intense price-based and service-based competition among the two vendors, it may be short-lived.
Gartner research director David Groombridge stated that “the competition between AWS, Azure in the IaaS marketplace will benefit sourcing executives on the short to medium term, but may be of concern on the longer term,” in a prepared statement. “A lack of significant competition for two key providers could result in an uncompetitive marketplace. This could lead to organizations being locked into one platform due to their dependence on proprietary capabilities, and potentially exposing them to significant price increases.