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Amazon is No. 1. Who’s next in cloud computing?

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Amazon Web Services(s amzn) is, by all accounts, the largest cloud service provider by far, although good luck finding third-party numbers to verify that. Amazon, like most of the big cloud providers, doesn’t disclose much about current or planned data centers.

New research from Accenture analyst Huan Liu estimates that Amazon’s Elastic Compute Cloud (EC2) runs on a whopping 450,000 servers. Amazon does not break out AWS revenue, but some say it could already be a billion dollar business.

So, stipulating AWS as No. 1, here are seven cloud rivals that could give it a run for its money over the next few years.

1: Rackspace: (s rax) While Rackspace encompasses managed services and pure hosting businesses, it’s also a major cloud provider with actual, paying customers.  Measuring by revenue and VMs, Rackspace currently has a lock on the No. 2 slot by a wide margin, said Gartner analyst Lydia Leong. As one data point, Rackspace public cloud revenue rose to $189 million in fiscal year 2011, up from $100M the previous year. Going forward, that business should only grow as Rackspace brings more OpenStack implementations online.

2: Google: (s goog) If you’re talking number of physical servers, Google could already be the biggest cloud player. As for paying customers? That’s harder to discern. Google is one of the few companies that can (and does) invest in the pure computing firepower to contend with AWS. If you count all that Google Apps and Gmail storage, then Google’s obviously a huge player. The Google App Engine platform-as-a-service is still around but isn’t a factor for business developers.

3: Microsoft: (s msft) Two-year-old Windows Azure has big capacity, but actual traction is unclear — but it is clear Microsoft is going for the gusto. Microsoft just launched an Azure-focused startup accelerator in Israel to help boost demand. Next week, it is expected to announce timing for the first of its ERP products — actually the first of any of its major products — to run on Azure. And, going forward, Microsoft Azure’s embrace of Hadoop could attract more of the next-generation big-data workloads that the cloud vendors compete for.

4: IBM: (s ibm) IBM SmartCloud is coming up fast on AWS and Rackspace even now, according to one cloud storage expert. That news surprised me but probably shouldn’t have, given IBM’s size and resources. And face it: IBM knows data centers. Like Microsoft, it is bringing Hadoop into its cloud with its InfoSphere BigInsights service.

5: Hewlett-Packard: (s hpq) HP’s been all over the map on cloud plans, promising an Azure-based implementation a few years ago that has gone nowhere and more recently standing up an OpenStack-based public cloud. Zorawar “Biri” Singh, SVP for HP cloud services, told the New York Times last week that HP’s cloud will add features and capabilities beyond what AWS provides.  HP has also said it wants to challenge AWS for the hearts and minds of cloud developers. HP has had its share of woes lately, but it’s still a tech power, and provided the cloud is a priority with new management, it would be hard to rule out.

6: VMware: VMware’s (s vmw) vCloud already runs a ton of clouds for third-party providers, and the company’s Cloud Foundry platform-as-a-service is gaining traction. All of that plus the Mozy cloud storage service, which VMware manages for parent EMC(s emc), means that the company — which dominates server virtualization inside the firewall — is gaining a pretty impressive toehold in the cloud beyond as well.

7: Facebook: Don’t laugh. It’s a wildcard, but Facebook is putting serious sweat into data centers. And it’s applying lessons learned to the Open Compute Project, which aims to apply open source development to hardware design. With more than 800 million users, Facebook knows a thing or two about cloud infrastructure. True, Facebook doesn’t offer cloud services now, but then again, Amazon used to just sell books. Facebook could evolve into many things. GigaOM’s Derrick Harris has already suggested that Facebook could be your next software vendor.

Scrappy competitors could make a play, but…

“To compete with AWS you would need three things: Billions to invest, the wherewithal to manage technology on a massive scale and freedom from legacy constraints. Google and Microsoft surely have the money as well as the technology chops, but both are constrained by commitments to their valuable core businesses. Who might come in to compete out of the blue? Maybe Facebook, if they were looking for another line of business,” said Robert Shear, president of Greystone Solutions, a Boston consultancy that uses AWS for most of its development and deployment work. “My guess is that AWS will keep on growing until they bump up against anti-trust limitations in the US and the EU.”

So there you have it: seven contenders who could duke it out for the No. 2 spot in cloud services over time — and maybe even battle AWS for the top spot. Who am I missing here?

Photo courtesy of Flickr user IntelFreePress.

47 Responses to “Amazon is No. 1. Who’s next in cloud computing?”

  1. Tom Laszewski

    Verizon/Terremark, Century Link/Savvis, and AT&T are all big ones as mentioned by Atul. CSC and HP/EDS run some of the biggest data centers in the world, and are starting to host public/private cloud for companies.

  2. Robert Jenkins

    Barb, this is a very thoughtful piece highlighting the importance of competition in the cloud space. However, there are definitely some key players missing. For example, CloudSigma has built a cloud IaaS offering with unprecedented flexibility that isn’t tethered to the deployment and resource constraints of the Amazons in the market. Our company provides a truly dynamic public cloud by offering a utility style, pay-as-you-go pricing model, open software layers and complete data portability. We don’t restrict our customers’ control over their cloud deployments, and we’re effectively demonstrating that customizability can be a defining feature of IaaS platforms. This kind of innovation is what will really propel the cloud forward and give Amazon a serious run for its money.

  3. What do you say to Apple? Billions to invest, check. Massive cloud storage presence already, check. Edge buildout, check… 1E+08s of nudge-able userbase, check

  4. Somebody up the list said that Gartner Magic Quandrant companies should be on here, I literally LOLed. How about no. their Cloud Q has about the same relation to reality as Friendship is Magic. Yeah, ponies. I went there.

  5. Scott Fossel

    Maybe this is naive, but how is Apple’s iCloud not here? By 2015 smartphone will be 100% US penetration, tablets 50%—and by all accounts 1/3-1/2+ of both of these markets will be iPhones + iPads running iCloud. What am I missing?

  6. what about:
    — Salesfore interesting player with the force platform – an early cloud player
    — SAP as they are the largest ERP vendor. Often not early in the game but successful – remember CRM…
    — Oracle with the full cloud ready stack

  7. Boris Renski

    450,000 servers and “almost a billion dollars” revenue… something doesn’t jive. Does that mean that they make 2.2K/year revenue per server… that barely covers amortization…

    I am willing to bet that the estimates are over by at least 10x as far as the number of nodes

  8. ricknucci

    This post is a little confusing…we are talking about Infrastructure as a Service providers, not cloud service providers. is a “cloud service provider” and eclipses all of these guys in customers/revenue.

  9. Jo Maitland

    I don’t see how HP, a high margin business, is going to compete in the low margin IaaS space based on a free cloud OS – OpenStack. And this idea that enterprise customers will come just because it is HP is a joke. Enterprise customers know all to well that HP lost its way several years ago and has not recovered. And since the Web OS fiasco, HP has zero cred with developers so convincing them that it is serious about PaaS is going to be very hard.

    • Jonathan Brown

      Yes, I think that HP might be smoking a little something in their pipe. IBM on the other hand – They are the ones to watch. I could easily see them with the 20% of the market that represents the part with high margins. They know how to sell services with compute attached (and are taking an application lifecycle management approach with their PaaS offering – integrating existing tools with the new platform) and that’s really what it’s going to take to win the long battle. Or, it’s somebody we’ve never heard of….

  10. i love this quote! ““To compete with AWS you would need three things: Billions to invest, the wherewithal to manage technology on a massive scale and freedom from legacy constraints.” there are only two people that describes. hp and ibm.

  11. Its very simple… VMware is the biggest Cloud provider. If you include both the Public and Private Cloud business, VMware has the largest footprint hands down.

      • Mullet Reeve

        Yes, cloud is more than virtualization, and so is VMware. But cloud is nothing *without* virtualization, and being the market innovator there means they don’t have to waste time getting it right, unlike Microsoft, whose virtualization is VMware circa 2008, maybe 2009 if you’re generous.

  12. Derrick Harris

    I think the list is good considering being No. 2 will require a sizable operation and general-purpose services. Everyone here has their own data centers and some good options for developers and enterprise workloads. Although, Dell might become competitive given its plans for VMware, OpenStack and Windows Azure clouds.

    • Atul K Chhabra

      Derrick, Barb,

      While this article is certainly provocative (as intended,) it looks at the scale of cloud offerings from the limited perspective of more SMB users, more servers, and PaaS & SaaS offerings.
      A different perspective can be found in the recent Gartner Magic Quadrant for Public Cloud Infrastructure as a Service. Besides Amazon, none of the players listed here figures in the leaders quadrant. For enterprises, cloud provides efficiency and agility. But they also care deeply about Quality of Service, Service Level Agreements, security attestations, and hybrid cloud offerings.

      This is not to minimize the innovations driven by Amazon, Facebook, and Google. They are constantly pushing the envelope on web-scale / warehouse-scale computing and forcing the carriers / managed service providers to take note.

      The article could use a little more enterprise perspective.

      • Derrick Harris


        If we look at the cloud market like the mobile market, AWS is iOS, and OpenStack is Android. Microsoft is Windows Phone (duh). I don’t know what VMware is. I’d say Nokia, but it’s too big. While AWS will probably have the single-largest footprint, it will be all the OpenStack clouds in aggregate that probably have the greatest number of customers. That probably makes Rackspace Samsung, right?

        I see enterprise clouds with their own tech platforms being RIM. Clearly the best choice for certain workloads, and able to do very, very well if they actually execute to keep up with the times. I think VMware fits in here too, but without analogy as it’s an enterprise-class platform.

  13. Oscar N.

    Every Cloud provider named on this list primarily provides a commoditized public cloud services either in either IaaS & PaaS – that’s about it. Neither AWS, RS, Google, MS have a true Enterprise grade Cloud offering geared towards the Enterprise security & data conscious customer. Why do you think Amazon, Racksapce & MS reduced their Cloud pricing packages last week? The true Enterprise grade Cloud offerings that the service providers embrace with their Global Network presence, Federal grade compliance & security features, Worldclass Datacenter facilities, are what todays business customers want to learn more about. At this level i would consider Verizon Terremark No1, with AT&T, Centurytel (Savvis) closely behind, they clearly dictate the future of the business cloud market.

    • Derrick Harris

      I don’t know how big any given enterprise cloud can scale. The deals will be bigger and the workloads will arguably be more mission-critical, but more hoops to jump through and more money will keep smaller developers away, especially as Amazon and Microsoft keep working on new enterprise features.

    • Vince Mayfield

      I do not know how you make the state “Neither AWS, RS, Google, MS have a true Enterprise grade Cloud offering geared towards the Enterprise security & data conscious customer.” I don’t know what is more enterprise grade than this On what facts to you base your opinion. Amazon & Microsoft have ISO 27001, FISMA, SafeHarbor, and PCI Compliance / Certifications. Just because it is Public Cloud does not make it unsecure or mean the data is not secure. Microsoft’s offering scales horizontally.