2018 Public Cloud Services

Market Trends and Buyer’s Guide

The trend toward public cloud services continues but cloud
Infrastructure-as-a-Service should not be your only destination.

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2018 Public Cloud Services
Market Trends
What will define the cloud market in 2018
and beyond?
1. Where We Came From 2. Where We Are Today
• Amazon Leads the Way • Focus on Hybrids
• The Microsoft (Azure) Effect • Office 365 and Cloud DR

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The 2018 Public Cloud Services

Market Trends breaks down
developments in the world of public
cloud to add an additional
perspective to the reviews. 3. Where We Are Going 4. Buyer’s Advice
• Beyond IaaS • Development Should Lead
• Containers and Serverless • Make the Connection

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 Amazon is the elephant in the room but
Microsoft, Google, and IBM are growing
2018 Public Cloud Services The Leaders
Market Trends

The Providers
The public cloud services market is The Others (non-exhaustive list):
either very crowded or not very
crowded at all, depending how you • Alibaba
look at it.
• Rackspace
There are dozens of hosting
companies providing public cloud • Virtustream
Infrastructure-as-a-Service (IaaS), but
considering sheer size Amazon Web
• Oracle
Services (AWS) is an order of • Century Link
magnitude larger than any other
provider. When comparing services, • NTT
market share, and growth Amazon
leads with strong secondary • Fujitsu
competition from Microsoft Azure, • Dimension Data
Google Cloud, and IBM.

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2018 Public Cloud Market Trends
Where We Came From

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 AWS came to dominate the market that it
created
Where We Came From
Amazon has this leadership distinction because it pioneered
and continues to lead the market in the kind of elastic, pay-
In the as-you-go, multi-tenant services that define cloud
computing, public cloud, and IaaS.

Beginning
Public Cloud Usage 2015 vs. 2014
There Was % of Respondents Running Applications
HP Helion

Amazon IBM SoftLayer

VMware vCloud Air
Google IaaS
Amazon introduced its Elastic Google App Engine
Compute Cloud (EC2) in 2006.
Azure PaaS
Other deployment models, like
Rackspace Public Cloud
the application hosting of
Azure IaaS
Software-as-a-Service (SaaS),
AWS
predate AWS but this was 0% 10% 20% 30% 40% 50% 60%
arguably the beginning of the
2014 2015
cloud computing revolution.

Source: “RightScale 2015 State of the Cloud Report”

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 IaaS, PaaS, and SaaS are cloud service
models, public cloud is a deployment model
Where We Came From

Public Cloud
IaaS and
More
Public cloud services are most
often associated with IaaS, but
IaaS is a cloud-based service delivery model that provides
they are often hosts for virtualized computing resources over the internet.
Platform-as-a-Service (PaaS) Specifically, a third-party provider hosts hardware, software,
and SaaS as well. servers, storage, and other infrastructure components on
behalf of its users, and the user is able to deploy and run
arbitrary software including anything from operating systems
to applications.

Public cloud is provisioned for open use by the public. It

may be owned, managed, and operated by a business,
academic or government organization, or some combination
of them. It exists on the premises of the cloud provider.
Source: National Institute of Standards and Technology
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 The cloud rush had many players: some have
since been acquired or exited the market
Where We Came From

Cloud IaaS
Takes Off
Driven by considerable market
hype, a broad range of
companies got into cloud IaaS
in this decade. Pure play cloud
providers like Amazon were
joined by rebranded hosting
companies that offered
infrastructure services. Also
joining the race were telecomm
companies (AT&T) and large
players in data center This Info-Tech Vendor Landscape from 2012 shows the
infrastructure (IBM, HP). breadth of providers of IaaS. Not represented are the literal
dozens of smaller and regional service providers that
added IaaS to their portfolios.

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 Azure began gathering steam in 2013 but
really took off with the Cloud First pivot
Where We Came From
Microsoft was initially more focused on the Windows OS
platform than cloud but in 2015 new top management

The Microsoft pivoted to a “Cloud First/Mobile First” strategy. Microsoft’s

new focus on cloud has had a profound effect on the public
cloud service market. We call this the Microsoft Effect.
Effect Growth of Enterprise IaaS Usage
Microsoft didn’t even rank in Microsoft vs. Amazon
Info-Tech’s Cloud IaaS 80%
70%
landscape in 2012. In recent
60%
years, however, Microsoft 50%
Azure has been firmly 40%
established as second to AWS 30%
in customers, total cloud size, 20%
10%
and global reach. How did that
0%
happen? Microsoft Azure Amazon Web Services

2014 2015 2016 2017 2018

Amazon still rules but Microsoft has been growing rapidly
since its “Cloud First” pivot. This chart shows percentage of
enterprises (over 1000 employees) in RightScale surveys
that reported having applications running on the respective
clouds.
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2018 Public Cloud Market Trends
Where We Are Today

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 In the most recent RightScale state of the
cloud survey, 92% are using public cloud
Where We Are Today

Public Cloud
Is Becoming
Mainstream
Public cloud adoption
continues to grow across all Adoption is even higher among larger enterprises and here
Azure is closing the gap with AWS even more. Google, IBM,
the major providers. Larger
and Oracle are also benefiting from their enterprise focus.
enterprises are leading the way,
adopting cloud solutions at a
higher rate than small and
midsized enterprises.

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 When it comes to revenue from cloud
services it is Microsoft that leads
Where We Are Today
2017 Cloud Revenue
Enterprise $20.00
$18.00

Focus Bears $16.00

$14.00
$12.00

Fruit $10.00
$8.00
$6.00
In terms of size measures like $4.00
number of customers, number $2.00
of workloads, and total amount $0.00
Microsoft Amazon IBM Salesforce Oracle
of data center space Amazon
leads but the total revenue In Billions
paints a different landscape. IBM cloud services is smaller in terms of size after the likes
of Amazon, Microsoft, and Google but is nearly equal to
Amazon when it comes to revenue. Microsoft and IBM have
a strong enterprise focus.

These numbers come from Bob Evans (@bobevans) writing

in Forbes.

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 Instead of hybrid more typical is multi-cloud:
Where We Are Today multiple service and deployment models

Hybrids,
Hybrids,
Everywhere
The cloud strategy for most
organizations is to pursue a
hybrid cloud. A hybrid cloud is
typically understood as a There can be more to the hybrid cloud. For example:
private cloud (virtualized
resources hosted a data center) • A hybrid strategy can encompass multiple cloud service
models – IaaS, PaaS, and SaaS where various workloads
and an external IaaS public
are provisioned according to requirements.
cloud connected (and perhaps
managed) together. • Another hybrid model is for externally hosted infrastructure,
such as servers in a colocation facility, to have high-speed
But the hybrid cloud can be interconnect with public cloud services.
many things.
• Still another hybrid could involve traditional architectures
connected to completely cloud native data and
applications.
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 Office 365 ‒ an example of a commodity
Where We Are Today application DR ‒ the cloud backup value add
A commodity app is an application that is standardized and
Top Projects offers little value differentiation in its backend architecture.
So, for example, if there is no differentiating value in the care

Office 365
and feeding of an Exchange server (only capital and
operating cost), why not let Microsoft take care of the back
end?

and Cloud DR
Info-Tech clients are looking at
a range of future cloud
migration options. In the near
term the top of mind “cloud”
projects have been Office 365
migration and cloud backup
and disaster recovery (cloud
DR). Disaster recovery (system recovery) in the cloud is a value
add to cloud storage for off-site backups. An off-site tape
vault may be cheaper, for example, but a tape vault lacks the
capacity to spin up virtualized servers and recover a data
center.

Cloud DR also provides an opportunity to test IaaS

(performance, costs, security, etc.) for future migration.
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 Enterprises are exploiting services that go
Where We Are Today beyond traditional infrastructure
Database-as-a-service leads the way.
Advanced Database services were the first advanced services offered

Services Are
by public cloud providers. Instead of building and
maintaining database servers for databases, the data
services are consumed as a service via program APIs.

Growing These could be traditional relational databases (like SQL)

but also completely cloud native database services like
Amazon Dynamo DB.
The block and tackle of IaaS
(virtualized server instances
and storage) dominates the
public cloud but more
advanced levels of service
abstraction are growing fast.

“A significant number of public cloud users

are now leveraging services beyond just the
basic compute, storage, and network
services.” Containers and serverless are on a roll.

‒ “RightScale 2018 State of the Cloud Report” Also rapidly growing in adoption are services for containers
and Functions-as-a-Service (Faas) for so-called serverless
computing.
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2018 Public Cloud Market Trends
Where We Are Going

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 The future belongs to those who use cloud
native services for business building apps
Where We Are Going

Higher Level
Infrastructure
Abstractions
IT infrastructure is typically
characterized by servers,
storage, and networks. IaaS is
characterized by software
defined (virtual) instances of
servers, storage, and networks.
Services that go beyond these
basic building blocks are
growing.

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 A container is more lightweight than a full
VM, for more workloads on less hardware
Where We Are Going
According to Cloudfoundry,
containers have seven to eight
Containers- times the density of VMs. Fully
72% of its cloud survey

as-a-Service
respondents are using or
evaluating containers.
Cloud container services include
The virtual machine (VM) is a container hosting environments like
basic unit of IaaS in the public Docker as well as orchestration
and private clouds. Where the tools likes Google-created
VM contains a full operating Kubernetes.
system a container packages
just the code libraries and OS
dependences are needed for the
application to run.

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 It’s called ‘serverless’ because no
application servers need be managed
Where We Are Going

FaaS
An even higher level of
abstraction is FaaS and so-called
serverless computing. Functions
are invoked on demand in the
cloud to act on or from cloud-
based data. Adoption of
serverless is small but growing
rapidly:
• In the Cloud Foundry survey,
46% are using or plan to use. There are, of course, servers underneath it all but these are
invisible and irrelevant to application creation. The best
• In the RightScale survey, 21% known, and most widely used, example of serverless is
are using, 21% experimenting. AWS Lambda chiefly because AWS is the best known and
most widely used public cloud service. But also getting
attention and growing in usage is Microsoft Azure Functions,
Google Cloud Functions, and IBM Cloud Functions (based
on Apache OpenWhisk).

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 The cloud paves the way for these as they
Where We Are Going will require infrastructure for a lot of data

Machine
Learning, and
the Internet of
Things (IoT)
Dozens of cloud native services
debut every day but two areas of
Examples
continued growth will be
services related to machine Machine Learning on AWS AWS IoT Core
learning as well as the IoT. Azure Machine Learning Azure IoT
Studio
Google Cloud Machine Google Cloud IoT
Learning Engine
IBM Watson Machine IBM Watson IoT Platform
Learning

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2018 Public Cloud Market Trends
Buyer’s Guide

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 The cloud decision is often weighted by
application developer needs

Buyer’s Guide Info-Tech clients often weigh into their decision how
application development needs (specifically enabling a
quicker time to value) can influence the provider choice.
So it isn’t as simple as, “All things being equal, which
IaaS provider is better?” All things are not equal.
Have Cloud service providers are also providing developers

Development with ever higher levels of abstraction for running their

code.

Take the Lead

IaaS is a major area, but all IaaS
providers want to get you using
their platform. If you have any kind
of development effort, you should
start there.

Source: Cloud Foundry

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Buyer’s Guide
Gauge the
Microsoft
Effect on You
Microsoft’s pivot into cloud will
have a huge impact or none at
all depending on your current
relationship with Redmond.
A fully “Microsoft Shop” will likely find
the choice of Azure a no-brainer
A more heterogeneous organization will find value in
Microsoft but also Amazon, Google Cloud, IBM, and
others. Greenfield start-ups building in the cloud from
scratch are a traditional sweet spot for Amazon. Some
advantages of the Microsoft Effect include:
 Microsoft is squarely aimed at the enterprise market.
Product relationship between in-house and Azure –
interfaces, pricing – are going to be more familiar and
useful for an enterprise than the complete à-la-cart
reliance on a third-party ecosystem found with AWS.
 Microsoft Azure allows you to execute the mature view
that this is not an all or nothing proposition. The ability
to deploy a seamless hybrid deployment (with
SQL/Server, for example) is a key Azure differentiator.
 Enterprise license mobility between in-house and Azure
is a very significant advantage for customers with a
large-scale or even a global footprint.
 API management was one of the customer-facing
benefits with Azure that was the final deciding point for
at least one of our customers.
 As a fast follower to AWS, Azure has also developed
advanced services such as containers and serverless.
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Buyer’s Guide
Make the
Connection
In an increasingly hybrid
environment, how you connect
your on-premises data center, or
private cloud, to the public cloud
is a critical consideration.
Look at what partner programs the
providers offer for direct interconnect
Examples of interconnect technologies include Microsoft
Azure ExpressRoute, AWS Direct Connect, and Google
Cloud Interconnect. Use cases for direct interconnect
include:
1. Connecting to cloud storage for backup,
replication, and DR in the cloud. Provides a low
latency pathway for the migration of large amounts
of data.
2. Hybrid infrastructure as service. You are
extending your private cloud to servers and storage
on the public cloud.
3. Hybrid application development. Applications that
have components both on premises and in the
public cloud will be less likely to suffer latency
effects.
Microsoft Google
ExpressRoute Cloud Interconnect
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 Distance to location introduces latency:
different locations have different services

Buyer’s Guide • Example: Amazon’s DCs are organized into Availability

Zones while Azure has Regions.

Location,
Location,
Location
It seems counterintuitive.
Cyberspace is beyond the limits
of physical space, but there is Source: Atomia
real physical infrastructure
under the cloud abstraction and • Not all Availability Zones and Regions are created
the capabilities and location(s) of equal. There can be underlying differences in features
that infrastructure matter. or product offerings by location for AWS and Azure.
This can have some definite challenges for customers
who must provide services within a given geographic
boundary.

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Bibliography
Alguacil, Peter. “Comparing the Geographical Coverage of AWS, Azure and Google Cloud.” Atomia, 24 Nov. 2016. Web.
Cloud Foundry. “Where PaaS, Containers and Serverless Stand in a Multi-Platform World.” Cloud Foundry, n.d. Web.
Evans, Bob. “Why Microsoft Is Ruling The Cloud, IBM Is Matching Amazon, And Google Is $15 Billion Behind.” Forbes, 5
Feb. 2018. Web.
National Institute of Standards and Technology. “Cloud Computing.” National Institute of Standards and Technology, n.d.
Web.
RightScale. “RightScale 2015 State of the Cloud Report: See the Latest Cloud Computing Trends.” RightScale, n.d.
Web.
RightScale. “RightScale 2018 State of the Cloud Report: Data to Navigate Your Multi-Cloud Strategy.” RightScale, n.d.
Web.
Synergy Research Group. “Cloud Market Keeps Growing at Over 40%; Amazon Still Increases its Share.” Synergy
Research Group, 27 Oct. 2017. Web.

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