Microsoft Beats Amazon in 12-Month Cloud Revenue
forbes.com
forbes.com
That said, I think that's evidence that this fits in the cloud revenue stream.
Imagine if MS was forced to "unbundle" Office 365. Consumers could purchase a license to run MS Office on any platform. On of which might be hosted Azure. What percent of the Office 365 revenue would accrue to the products division compared to the cloud division. Sincere guess: 90%+.
Another hypothetical scenario. Imagine if Apple offered a deal on iPhones. Get an iPhone for free as long as you sign up for a grossly overpriced $1000 iCloud contract. All of a sudden Apple would have hundreds of billion in "cloud revenue". But no reasonable person would all of a sudden say that they're now the biggest cloud provider in the world.
And when people buy Amazon RDS, they're primarily purchasing a database product, and the cloud just happens to be the mechanism of delivery.
Imagine if Amazon was forced to "unbundle" Amazon RDS. Consumers could purchase a license to run the database on any platform. On of which might be hosted AWS. What percent of the Amazon RDS revenue would accrue to the products division compared to the cloud division...
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Yes, this is the literal definition of a "no true scotsman" fallacy.
Amazon Aurora does appear to be a somewhat unique offering, but it appears to be tightly coupled to their infrastructure; I doubt that it could be unbundled without major rearchitecture.
There is clearly a distinction here. For example, I don’t know if the word Azure is even mentioned when I go to buy an O365 license.
And people can still buy standalone Office installations.
> For example, I don’t know if the word Azure is even mentioned when I go to buy an O365 license.
How does this matter? Microsoft includes this as Cloud revenue and not Azure revenue.
If something is described as 'cloud' but uses a definition most people don't recognise or describe as 'cloud', that's at least worth noting. It's arguably prescriptive linguistics.
However it might be true that I'm the exception on this, and that most of the Office365 licenses are sold to corporations that are more interested in the basic office tools.
With Dropbox dropping support for ZFS on Linux, I had no reason not to switch. It's cheaper than Dropbox and you get Office.
You can't punish Microsoft's categorization of these things just because Amazon doesn't have directly competing products. Well, actually they do; they have Workdocs and hosted AD. But no one uses them. Both of these are official AWS products; are you going to suggest we should start sharding out Amazon's product suite by revenue per product just to get a perfectly fair comparison of revenue?
G-Suite is categorized as a Google Cloud product. I guess we should just completely cut G-Suite out of GCloud's revenue total? Even though it does directory-like functionality and competes directly with Office, Outlook, etc?
Where do you draw the line? Ultimately, you draw the line at mechanism of delivery and payment, which is what Cloud has always been about. Office 365 and AzureAD are pay-per-seat, and thus by extension correlates with pay-as-you-go, just like any other cloud product.
You can literally buy office as a standalone product. That's the ONLY way you could buy it a decade ago. So the current situation is exactly what you're describing.
I feel like there is a fundamental distinction to be made between infrastructure services (like AWS S3, EC2, RDB, etc) and end-user services (like Office 365). Combining the two doesn't make a lot of sense; procurement for the two typically happens separately, and businesses frequently mix-and-match vendors for infrastructure and end-user services.
How exactly should they split out the email or OneDrive component from Word or Excel of your $10-20/month? I don't think there's really a sensible way to do it without overcomplicating things.
For comparing infrastructure offerings, it would be really misleading to include things like Amazon Music or MS Office (both of which are cloud offerings).
Microsoft is actively competing against AWS IaaS and PaaS services, and leveraging embedded product features and license terms to force the issue with enterprise customers. Microsoft's spin is that those embedded relationships will compel customers to just join Azure. (Example: Windows 10 and Azure AD dramatically simplify PC management. How receptive is the market to that proposition? (I don't know, btw))
If they aren't getting heavy traction with their millions of existing enterprise customers adopting cloud services, they are doing something wrong that Amazon is doing right.
Additionally, the fact the Microsoft can sell Office and Exchange is a known, irrelevant fact -- they've been extracting a toll from every business since like 1995. What isn't clear is if they have the ability to compete toe to toe with AWS (the market leader in IaaS/PaaS).
Frankly, Microsoft are coming off desperate.
To me cloud provider in this context means a vendor that provides cloud platform for others to develop on top of. RDS counts, Office doesn't.
That's how I look at it and I'm sure that's how MS looks at it. Certainly they wouldn't be blinded by Office revenue and think Azure is close to beating AWS. Office competes with Google Work Suite which isn't even part of GCP (even though it's linked).
I completely agree with you on this one.
However all the cloud providers include their SaaS subscription services revenue in cloud revenue. So when comparing market, revenue and stocks, that's what we should compare them on. But here we are in this thread looking at their "cloud revenue" to figure out which is a bigger "cloud vendor". That's like comparing Apples and Oranges.
"Microsoft hasn’t disclosed how much revenue Azure brings in, but the Evercore analysts estimated that it generated more $7.74 billion in the 2018 fiscal year."
From: https://www.cnbc.com/2018/10/24/microsoft-earnings-q1-2019.h...
The interesting thing about O365 is that it combines a very valuable licensing cash stream with a variety of services.
The story that Microsoft SEs used to sort of tell a few years back was that Microsoft needed so many spinning disks to support Exchange workload IOPS that they had ridiculous amounts of "free" storage available for low-IO workloads like SharePoint/OneDrive. No idea if that was true years ago or is true today.
I may be wrong but I just don't think it's costing them billions in AWS infrastructure to run.
In the world of large enterprise which is just now waking up and jumping all-in with "digital transformation" projects and "cloud strategies" Microsoft appears to be winning the battle. I work for a company that services large enterprises and anecdotally I'm seeing the majority of them choosing Azure over AWS. I believe this is in large part because Microsoft knows how to sell to enterprises, they have great tie-ins with existing on-prem core infrastructure like Active Directory which is a big deal to large companies. When large enterprises start jumping on board they will move the needle pretty significantly as they ramp-up. I anticipate Azure closing the gap on AWS pretty significantly over the next 2 years.
Using their "cloud" revenue to figure out which is a bigger "cloud vendor" is a fallacy.
I wish these large corporations didn't demand so much creativity from their accountants to bluster an image.
>Given this week’s theme, though, I wanted to focus on AWS: revenue was up 46%, and while that may be lower than Azure in percentage terms, it is almost certainly higher in absolute terms. AWS had $6.7 billion in revenue last quarter, while Microsoft’s entire Server Products and Cloud Services — the majority of which remains on-premises — was $5.7 billion. Microsoft of course has other cloud revenue, including Office 365 and Dynamics 365; those are SaaS products though and generally don’t compete with AWS.
https://stratechery.com/2018/ibm-red-hat-follow-up-microsoft...
2018 is almost over and I still don't know if I should go fully serverless, more importantly, which cloud vendor has fixed the "cold startup time" for serverless functions. Google seems quite promising but still no recent study has been done on this. Would somebody like to see a test on this done? I've been wanting a straight up answer for a long time but hard to find a consensus, seems to be all over the place.
I'm interested in this problem area, so I would be interested in your definition of fixed.
For example AKS (azure kubernetes service) has been problematic for us. Similarly AWS RDS is much better than Azure PostgreSQL offering.
https://azure.microsoft.com/en-gb/blog/azure-immutable-blob-...
Azure is just now rolling out availability zones. There are strange constraints everywhere, like you can only use premium storage accounts with specific VM types. You cannot use the same premium storage account for blobs. In general, not all configurations of skus for storage accounts, vms and disks are supported. You need to match availability set skus between scalesets and load balancers. If you connect an internal 'standard' load balancer to an instance, then it cannot reach the internet anymore. You can only attach one internal and one external load balancer to a scale set. You can't use the internal load balancer to loopback (same as internal AWS NLBs, but AWS has other options).
And so on. It all seems poorly integrated. Budget 5x as much time for a similar deployment on Azure as compared to AWS or GCP. Add more buffer if you need flexible automation, as you'll bump into those edge cases often as people change parameters.
They have a ridiculously huge amount of features compared to the other two major cloud providers, but integration between them is iffy. It is improving.
AKS seems pretty good, although it's still new and people are reporting issues. But it is promising, you can actually tweak quite a few things, and I have high hopes for the compatibility story (even more so than GKE). AWS's EKS is a marginal implementation at best.
On Azure AD, the tables are turned: it's AWS that provides an inconsistent story. There are many options, none are as well polished compared to Azure.
They did learn from some AWS mistakes. But technically speaking they have a bunch of polishing to do.
It makes no god damn sense. They had every opportunity to look at how Azure or Google were doing it and just straight-up copy it. For Christ's sake, they were over a year late to the game.
I remember during the original announcement, maybe its documented somewhere, they announced that Fargate was coming to EKS "eventually". They don't even have managed worker nodes for normal VMs, if their intention is to bring Fargate as well we literally won't see it for another two years. It took them over six months to get from announcement to GA.
The only good thing I have to say about it is that it's pretty reliable. Which isn't saying a lot because it doesn't do much, but they're happy to charge you $150/mo for what it does.
Did I mention it takes over 20 minutes to create a new cluster? Well, actually, they "call" it a cluster, but its really just the control plane. The actual cluster can take up to 30 minutes for everything to actually connect and be usable. My company was interested in doing a "pristine" staging environment for every/some PR, throwing it away afterward. Interesting idea. Not worth it on EKS because their performance is so god awful.
EKS is literally the reason why we abandoned AWS in favor of Google Cloud. I'm not suggesting that the rest of AWS isn't overall pretty great, but when nearly all of your workload is defined as "90% inside kubernetes, a few cloud-managed queues, and blob storage" Amazon isn't doing themselves any favors by ignoring the most interesting infrastructure technology to be released in the past five years. Oh, and our bill dropped by ~50% because preemptible instances on GCloud are actually easy to use, instead of the sheer insanity of trying to integrate spot fleets with an eksctl cluster.
Including Office 365, Dynamics, etc doesn't make sense to me. We don't include Prime in Amazon Cloud, AFAIK.
Raw compute and storage isn't where the money is at long term, it's the lock in value add services (especially with Kubernetes and Hashicorp making multicloud and portability first class).
Sidenote: I have seen A TON of open roles looking for Azure and GCP skills over AWS lately.
[0]: https://www.microsoft.com/en-us/Investor/earnings/FY-2019-Q1...
(Disclaimer: I work for microsoft)
Under C+E, the last time they tipped the hand on cloud revenue it was ~18 billion with about a third from Azure AFAIK. To me, that is woefully misleading to compare us on 1:1 terms with AWS.
Amazon isn't currently a major player in that arena, but they are still competing under the Amazon banner.
Microsoft Dynamics is a CRM product. Completely different spheres.
The push now that I hear about is subscription windows, pstn dialing/O365 E5 and azure commit.
Amazon: 12.2B
Microsoft: 3.1B
Assuming Amazon continues on the same 25% YoY trend, it would be 15B in 2018. Microsoft could beat that number by reaching a 400% growth rate. That would be pretty amazing. But it's not the case.
I'm not exactly sure what Gartner includes in its "IaaS" revenue figures, nor am I sure what Forbes is including in its "cloud" revenue figures, but even Amazon's official press release [1] (which is what the OP is comparing) gives completely different numbers for 2017 AWS revenues than Gartner.
1: https://ir.aboutamazon.com/news-releases/news-release-detail...
Microsoft have been playing this game for years now. It's a joke.
Anybody with just a little sense of how the industry works knows that AWS still leads the market with 80% to 90% penetration.
Microsoft should be punished for misleading the public this way. And some analysts should be fired for not knowing better.
The current state of affairs is that AWS still dominates. Your claim of 45% shows that you are simply repeating what some myopic analyst has written. Talk to industry experts, and you'll see why I'm right.
Anyhow, data > anyone's anecdotes.
Nobody is saying otherwise.
> Your claim of 45% shows that you are simply repeating what some myopic analyst has written. Talk to industry experts, and you'll see why I'm right.
This is anecdotal. Provide some verifiable source.
Does AWS not report their WorkDocs (which nobody uses, and hence less revenue) and similar revenue in their AWS revenue? Does GCP not include G-Suite revenue in their Cloud revenue? I don't see what 'game' is Microsoft playing? Are they saying they are the #1 cloud provider because of their revenue? No.
This report is not a dick measuring contest to find the best and the biggest cloud provider. This is for Microsoft to showcase to investors why they should invest in Microsoft.
https://www.geekwire.com/2018/state-cloud-amazon-web-service...
There are arguments on both sides about "Should Office count as Cloud revenue?". We have the same decision regarding GSuite. If you take the "Cloud is anything a business depends on" argument, then it obviously should count (but then all sorts of things like SaaS would count).
I like to think of this from an investor's standpoint: what do they really want to know? In my estimation, they want to know about potential hyper-growth market opportunities for the company.
For Microsoft, more than anyone else, Office isn't a high growth opportunity. There is some amount of revenue uplift from customers "upgrading" from Office on prem to Office 365 (like Adobe when they forced Creative Suite to be subscription) but I doubt there are going to be lots of net new customers just because Office is on a subscription model. By contrast, Cloud infrastructure is a large opportunity for Microsoft.
For Google (and to some degree AWS), "productivity suites" is actually a reasonable growth market, particularly as market share often comes from Office. However, the raw productivity market is still "only" $XXB (it's predominantly $X/seat, and there are only so many employees in the world) while people talking about "cloud" usually are talking about the opportunity being "all money spent on IT".
tl;dr: I watch the YoY "Azure growth was XX%" numbers and ignore the headline revenue.
// The enemy of my enemy...
It's so MS with 50 menus with uninteresting options intertwined and error messages usually make no sense, just like Windows.
I've even chosen to use another provider for running Windows, even though running it on MS feels more safe.
I'll never want to work for a company with pure MS stack.