Amazon’s $5 billion cloud saga: What’s in it for India

“India is a very heavy base of SMBs and startups. Startups here prefer going on the cloud as investing in hardware infrastructures could be a costly proposition for them...'

Arti Singh May 08, 2015 17:07:59 IST
Amazon’s $5 billion cloud saga: What’s in it for India

Amazon amazed everyone by breaking out financial details of its secretive cloud computing business. Chief Executive Jeff Bezos, during first quarter earnings call, revealed that Amazon Web Services is “a $5 billion business and its growth is accelerating.”

For the quarter, the e-commerce giant logged $1.57 billion in revenue, up almost 50 percent. AWS – which is Amazon’s cloud unit – accounts for about 7 percent of the company’s total revenue.

Amazons 5 billion cloud saga Whats in it for India

Amazon logo. Reuters image

With over 1 million business customers, including biggies like General Electric, News Crop., Kelloggs, etc, AWS’ blockbuster numbers make it “larger than its four main competitors combined in the cloud infrastructure service market,” according to Synergy Research Group.

While Microsoft, IBM, Google, and Salesforce can all claim leadership in some segments of the cloud market, but AWS continues to grow faster than the market as a whole and its market share crept up to 29% in the quarter, the research firm claimed.

“Across the full and varied spectrum of cloud activities there are now six companies that can lay a valid claim to having annual cloud revenue run rates in excess of $5 billion – AWS, IBM, Microsoft, HP, Cisco, and Salesforce – and all are able to claim leadership in different parts of the cloud market,” said John Dinsdale, chief analyst and research director, Synergy Research Group. “However, on a strict like-for-like basis AWS remains streets ahead of the competition in cloud infrastructure services. Furthermore, this part of the cloud market is growing much more rapidly than SaaS or cloud infrastructure hardware and software.”

Many of its competitors are not yet comfortable to share numbers for its cloud businesses. For example, IBM has cloud revenue of $7.7 billion, but a big chunk of that comes from "hybrid cloud," which involves companies buying both hardware and software. While, Microsoft is also saving itself from disclosing how much it makes from Azure – which is seen as direct competitor of AWS. For its third quarter, Microsoft said its “commercial cloud” business, which includes, but is not limited to Azure, was up 106%, and now represents $6.3 billion in annual revenue.

However, a recent report from Deutsche Bank (which was released before AWS numbers were made public) claimed that Amazon’s 9-year old cloud unit revenues are approximately estimated as $6 billion, nearly ten times the size of Microsoft Azure today. Deutsche Bank estimates that Azure revenues for the current fiscal year are estimated to be between $500 million and $700 million and represents approximately 1-2% of total Microsoft revenues.

AWS in India

“AWS is a success in the Indian SMBs and startups segment,” said Greyhound Research founder Sanchit Gogia. “India is a very heavy base of SMBs and startups. Startups here prefer going on the cloud as investing in hardware infrastructures could be a costly proposition for them. Multiple data centres across the globe, easy licensing, Linux support, and no history of tech investments, and cost makes AWS favourite among Indian startups.”

“In India, Amazon Web Services has got the highest market share in the startups segment, followed by IBM and Microsoft,” he added.

Whereas, large enterprises in India are more with IBM, Microsoft, and Salesforce as they want better storage to suit their complex IT environments. Companies might prefer AWS platform for database, CRM, but not for ERP and BI & visualization, Gogia said.

“IBM, Netmagic, AWS, and Azure are top four cloud vendors in India, and Google is doing well on the SaaS side,” he noted.

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