Next month will mark the 155th anniversary of a piece of legislation that President John F. Kennedy once described as “the single greatest stimulus to national development ever enacted.” It was the Homestead Act of 1862. By 1862 the United States had grown from approximately 500 million acres of land to almost 2 billion (with a B) acres, a majority of which was in the public domain. Under the act, over 1 billion acres were made available to settlers. An individual could obtain 160 acres of land. If they lived on, cultivated, and improved that land over a 5-year period, the land was theirs. This led to the explosive growth of the west in the United States. Many of the western territories worked hard to entice the settlers to their public lands. Increased population, cultivated land, resources, all increased the territories influence with the U.S. government and provided the path toward eventual statehood.
In many ways, I see a parallel in today’s public cloud environments. Each of the public cloud ‘territories’ are vying for business ‘homesteaders’ to settle in, grow, and cultivate in their clouds. Four months into the year, 2017 is shaping up to be the year of the great cloud land grab. Let’s look at how some of these cloud territories are seeking to expand and attract the homesteaders.
The Amazon AWS Territory
By any metric, most would agree (except perhaps Oracle, more on that later) that Amazon is the dominant cloud territory. According to a report by Synergy Research Group, in 2016 Amazon held a 45% market share, more than twice the combined market share of the next three competitors: Microsoft, Google, and IBM. There have been a range of reports that Amazon has approximately 8-10 times the capacity of their next 14 competitors combined. That is a lot of cloud territory.
Amazon does not rest on its laurels. Amazon releases new features, services, and capabilities at a breakneck pace targeting all levels of an organization. At their most recent AWS Summit, they released a laundry list of new capabilities ranging from new billing models for the business to new continuous integration as a service capabilities to attract the developers. Additionally, Amazon has a variety of incentive and discount programs to encourage mass migrations to their platform. The goal is clear. They are aggressively going after the business ‘homesteaders,’ a land grab to continue the dominance and size of their cloud territory.
The Microsoft Azure Territory
In Gartner’s latest Magic Quadrant report of IaaS services, they said ‘The market for cloud IaaS has consolidated significantly around two leading service providers.’ Microsoft was the second of those two providers. Like Amazon, Microsoft is not sitting still. They have been making huge inroads and achieving significant growth against AWS. They have been consistently rolling out new features and services to help provide differentiation. Microsoft, like Amazon, is aggressively trying to attract the cloud homesteaders to their territory.
A recent article, ‘Embrace our cloud, damn you: Microsoft dangles 40% discount on Azure instances,’ outlined some of those efforts. In addition to large discounts, Microsoft is offering a variety of tools and services to help analyze what your migration costs and savings might look like. These kinds of analysis tools from the vendors should always be taken with a grain of salt. In a recent podcast hosted by CTP’s David Linthicum, we talked about the fact that tools like these only have a certain amount of value. Amazon has a similar tool. These tools will obviously have a bias toward the platforms they are focused on, and do not take the complexities of a true migration into account. That being said, they are useful to the vendors in trying to attract those cloud homesteaders to their territory.
The Google Territory
In the Gartner magic quadrant mentioned earlier, the only vendor in the visionary quadrant was Google. As an example of how volatile this market is, just two years ago there were several vendors in the Visionary quadrant including IBM, CSC and Verizon. Google has pioneered scaling infrastructure, container usage and Big Data. According to Gartner, Google is “leveraging its expertise and experience with Big Data in its own consumer business in order to build product strength in technologies such as analytics and machine learning.”
While having great vision and technology is helpful, Google has struggled with selling to the enterprise, a necessary skill to complete against the Amazons and Microsofts of the world to grow their cloud territory. Google has recognized this and is striving very hard to change that. At their recent Google Next Conference in San Francisco, Google put front and center new enterprise-focused leadership, messaging, products and sweeping channel program changes.
IBM, Oracle, and others, the struggling territories
There are other cloud territories struggling to attract the cloud homesteaders, IBM and Oracle among them. Both companies are huge technology land barons in their own right but have struggled with the new business models and ensuing disruptions that cloud brings. IBM is working hard at shifting gears from a mainframe/selling iron model to the new services model, and has attracted a lot of attention with its work in machine learning (Watson), the Internet of Things and blockchain. Time will tell if they are able to adapt. I never count IBM out of the picture.
Oracle, on the other hand, thinks it can beat Amazon and Microsoft without doing a land grab. In a recent interview with Fortune Magazine, Oracle CEO Mark Hurd said they will be able to be competitive because “Our core advantage is what we’ve said all along, which is that it’s about the intellectual property and the software, not about who’s got the most real estate.” It’s an interesting argument. Not many people outside of Oracle seem to buy that argument. For a great perspective on that, I recommend a blog by James Hamilton, ‘How Many Data Centers Needed Worldwide.’
2017 is the year of the cloud land grab
There is a common phrase often attributed as a Chinese proverb (or curse): “May you live in interesting times.”
For those following the cloud technology space, there is no doubt we are living in interesting times. The land grab is in high gear as the cloud territories try to attract and hold the cloud homesteaders on their land. For the cloud homesteaders, this is a net positive. The features, services, and incentives provide lots of options, and ultimately benefit the businesses looking to leverage the cloud to achieve their objectives. One thing is for sure, this journey will not be boring.