uploads/2016/03/cloud-infrastructure1.png

Economic Slowdown Failed to Impact Cloud Adoption

By

Updated

Tech players continued to post growth in cloud space amid uncertainty in global economy

In the past couple of weeks, leading technology and cloud companies like Oracle (ORCL), Microsoft (MSFT), IBM (IBM), Salesforce (CRM), and Workday (WDAY) announced their fiscal earnings. Two things emerged from these companies’ quarterly earnings. The uncertainty prevailing in the current business climate and thus the shrinkage in corporate technology budgets were common to all the companies, according to their management.

Neither of these factors bode well for technology companies. However, double-digit growth in the cloud space from almost all the companies mentioned above indicates that despite an economic slowdown, businesses and organizations continue to shift their computing and software towards to the cloud.

Article continues below advertisement

Top five players control ~55% of cloud infrastructure space

According to a recent report by Synergy Research, cloud infrastructure service revenues grew 52% on a YoY (year-over-year) basis in 2015. Here cloud infrastructure revenues include IaaS (infrastructure-as-a-service), PaaS (platform-as-a-service), and private and hybrid cloud. Cloud infrastructure space is dominated by five players: Amazon (AMZN), Microsoft (MSFT), IBM (IBM), Google (GOOG), and Salesforce (CRM), which collectively command ~55% of the market share. The above chart shows the market share of players in the cloud infrastructure space in 2015.

Though Google’s products like Android, Maps, Search, or Gmail are dominant in their respective fields, in the cloud infrastructure space, with only a 4% market share, Google is way behind Amazon and Microsoft. Later in the series, we will discuss how Google intends to rectify this situation and improve its position in the cloud space.

Investors who wish to gain broad-based exposure to Google can consider investing in the iShares US Technology ETF (QQQ). QQQ has an exposure of 24.5% to application software and invests ~5% of its holdings in Google.

Advertisement

More From Market Realist