Q3 2020 earnings are in for the ‘big three’ cloud providers and you know what that means – it’s time for an AWS vs Azure vs Google Cloud market share comparison. Let’s take a look at all three providers side-by-side to see where they stand.
Note: several previous versions of this article have been published. It has been updated for November 2020.
AWS vs. Azure vs. Google Cloud Earnings
To get a sense of the AWS vs Azure vs Google Cloud market share breakdown, let’s take a look at what each cloud provider’s reports shared.
Amazon reported Amazon Web Services (AWS) revenue of $11.6 billion for Q3 2020, compared to $8.9 billion for Q3 2019. AWS revenue grew 29% in the quarter.
Across the business, Amazon’s quarterly sales increased to $96.1 billion, up 37% and beating predictions of $92.7 billion. The net income of $6.3 billion was the highest in a single quarter yet for the giant, driven by online shopping during COVID-19 – though note that the company is careful to note the $2 billion in costs related to COVID-19 this quarter, as well as $4 billion last quarter and $4 billion for Q4. And AWS? It made up 12.1% of Amazon’s revenue for the quarter – and 57% of its operating income.
AWS only continues to grow, and bolster the retail giant time after time.
One thing to keep in mind: you’ll see a couple of headlines pointing out that revenue growth is down and/or highlighting the fact that it’s flattening out, quoting that 29% number and comparing it to previous quarters’ growth rates, which peaked at 81% in 2015. However, that metric is of questionable value as AWS continues to increase revenue at this enormous scale, dominating the market (as we’ll see below).
AWS announced customer wins for the quarter including payments technology company Global Payments, biotechnology company Moderna, restaurant chain Jack in the Box, visual effects company Weta Digital, household appliance manufacturer Arçelik, and more.
While Amazon specifies AWS revenue, Microsoft only reports on Azure’s growth rate. That number is 48% revenue growth over the previous quarter. This time last year, growth was reported at 51%. As mentioned above, comparing growth rates to growth rates is interesting, but not necessarily as useful a metric as actual revenue numbers – which we don’t have for Azure alone.
Here are the revenue numbers Microsoft does report. Azure is under the “Intelligent Cloud” business, which grew 20% to $13 billion. The operating group also includes server products and cloud services (22% growth).
The lack of specificity around Azure frustrates many pundits as it simply can’t be compared directly to AWS, and inevitably raises eyebrows about how Azure is really doing. Of course, it also assumes that IaaS is the only piece of “cloud” that’s important, but then, that’s how AWS has grown to dominate the market. EVP and CFO Amy Hood highlighted demand for cloud offerings as a key driver to Microsoft’s current and future revenue. Office Commercial and consumer products are both growing – unsurprising in the work-from-home era. Additionally, Microsoft Teams has reached 115 million daily active users, up from 75 million in April.
However, overall, Microsoft exceeded analyst expectations in the second full quarter of the COVID-19 pandemic, with overall revenue coming in at $37.2 billion vs. $35.7 billion expected.
This quarter, Google Cloud, which includes Google Compute Engine and G Suite, generated $3.44 billion in revenue – a growth of 45% year-over-year.
Overall, Alphabet’s revenue increased 14% year-over-year to $14.17 billion. Ruth Porat, Alphabet’s CFO, reported that Google Cloud Platform’s growth rate was meaningfully above cloud overall. Headcount growth is planned to focus on Google Cloud in the next quarter.
Next quarter, Alphabet will break out Google Cloud as a separate reporting segment to show the scale of investments. They will also disclose full-year Google Cloud results back through 2018.
Cloud Computing Market Share Breakdown – AWS vs. Azure vs. Google Cloud
When we originally published this blog in 2018, we included a market share breakdown from analyst Canalys, which reported AWS in the lead owning about a third of the market, Microsoft in second with about 15 percent, and Google sitting around 5 percent.
In 2019, they reported an overall growth in the cloud infrastructure market of 42%. By provider, AWS had the biggest sales gain with a $2.3 billion YOY increase, but Canalys reported Azure and Google Cloud with bigger percentage increases.
As of October 2020, Canalys reports that the worldwide cloud market grew 33% this quarter to $36.5 billion. AWS has 32% of the market and generated more revenue than the next three largest combined, Azure is at 19% of the market, Google Cloud at 7%, Alibaba Cloud close behind at 6%, and other clouds with 37%.
It seems clear that in the case of AWS vs Azure vs Google Cloud market share – AWS still has a substantial lead, and their market share remains steady.
Bezos has said, “AWS had the unusual advantage of a seven-year head start before facing like-minded competition. As a result, the AWS services are by far the most evolved and most functionality-rich.”
Our anecdotal experience talking to cloud customers often finds that true, and it says something that Microsoft isn’t breaking down their cloud numbers just yet, while Google admits they’re behind but leans in.
AWS remains far in the lead for now. With that said, it will be interesting to see how the actual market share numbers play out over the coming years.