Amazon AWS’s hold on its customers is loosening
Previously in this series, we discussed Microsoft Azure’s latest customer, BMW AG. This made news because BMW AG has been a long-standing customer of Amazon’s (AMZN) AWS (Amazon web services).
In previous reports, we have extensively discussed the cutthroat competition brewing between Amazon and Microsoft (MSFT) on the cloud. BMW has cleared the air by stating that it remains an AWS customer.
In February 2016, Google (GOOG) (GOOGL) gained a customer in Spotify, a music streaming company that has been using Amazon’s AWS for a long time. Dave Bartoletti, an analyst with Forrester Research, called the Spotify deal “a great win for Google.” Bartoletti is of the opinion that Google’s data analytics service, BigQuery, helped the company win the Spotify deal. Note that Spotify’s relationship with Amazon, however, remains unchanged.
In March 2016, Google reported that it also won some business from Apple (AAPL), which has long preferred AWS.
Players in the cloud space are competing aggressively
Although Amazon controlled more than 30% of the cloud space in 2015, Microsoft and Google, who respectively command second and third position in the cloud space, are rapidly moving up, if the customer win from AWS is anything to go by.
If we consider Morgan Stanley’s estimates, Google generated $500 million in cloud revenues in 2015. On the other hand, Amazon’s AWS, a leader in the cloud infrastructure space, grew by 70% to report $7.9 billion in revenue in 2015.
Microsoft’s Intelligent Cloud revenues grew slightly more than 6% to $12.2 billion for the six-month period ended December 31, 2015. To further strengthen its position in the cloud space, IBM announced that by the end of 2017, it intends to build 12 new data centers to expand the global reach of its Cloud Platform services. Microsoft is already partnering to not only push Azure, but also to venture into rapidly growing and disruptive areas like blockchain technology.
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.