Cloud Wars

The rivalry between Amazon Web Services, Microsoft

Azure, and Google Platform, and how multi-cloud
strategies are transforming the industry.

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ABOUT THE ANALYST

Jud Waite
Senior Intelligence Analyst
@judwaite | jwaite@cbinsights.com

Jud Waite is an intelligence analyst at CB Insights, where he produces data-

driven analysis and research reports on private company financings, exits, and
performance trends across emerging industries, geographies and investors. His
research has been cited in Business Insider, CNBC, Bloomberg, CNBC, and the
Financial Times.
Prior to joining the research team at CB Insights, Jud was an early member of CB
Insights' Customer Success team where he specialized in working with venture
investors. Jud is a graduate of Lafayette College.
Popular research by Jud:
• What Is 5G? Understanding The Next-Gen Wireless System Set To Enable Our
Connected Future
• Rich Communication Services (RCS): The Next-Gen Messaging Tech
Reinventing Brand Communications

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Contents
9 A Brief History of Cloud Computing

17 The Emergence of Cloud Wars

• The Dominance of AWS
• The Enterprise Expertise of Azure
• The Long Game of GCP

39 The Rise of Multi-Cloud Strategies

49 Shifting Power Dynamics

56 Questions?

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CLOUD WARS

A Brief History of
Cloud Computing

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 The rapid expansion of internetworking

1969 1970 1973

1959 1963 1969 1970s 1981 1990s

Time-sharing The internet

John McCarthy J.C.R Licklider First ARPANET
solutions becomes
starts work presents the
messages expands with global and the
on the first idea of an become term “cloud
time-sharing Intergalactic sent on the the addition
commercially computing” is
project Network ARPANET available of CSNET
first used

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CSNET connects to ARPANET in 1981

CSNET as of June 1st, 1983 11

The internet becomes global in the 1990s

Source: Brian Reid; Global aggregate news flow on May 13th, 1993 12
Compaq uses the term ‘cloud’ first in 1996

Source: https://s3.amazonaws.com/files.technologyreview.com/p/pub/legacy/compaq_cst_1996_0.pdf 13
 GOOGLE RECOGNIZES THE POTENTIAL OF THE CLOUD

“What’s interesting [now] is that there is an emergent new model. I don’t

think people have really understood how big this opportunity really is. It
starts with the premise that the data services and architecture should be
on servers. We call it cloud computing — they should be in a ‘cloud’
somewhere.” – August 2006

Eric Schmidt
Former CEO of Google

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AWS had already established its cloud platform
Andy Jassy
founds AWS
with team of
57

AWS
2003 introduces
Simple Queue
Service (SQS)

AWS
re-launches 2004
with delivery
of S3 and EC2

2006 Andy Jassy

promoted to
CEO of AWS Amazon Web Services Solutions
Catalog, August 2006
2016
Source: https://archive.org/web 15
 CLOUD COMPUTING REMOVES BARRIERS TO ENTRY

“Amazon S3 is based on the idea that quality Internet-based storage should be taken for
granted. It helps free developers from worrying about where they are going to store
data, whether it will be safe and secure, if it will be available when they need it, the
costs associated with server maintenance, or whether they have enough storage
available. Amazon S3 enables developers to focus on innovating with data, rather than
figuring out how to store it.” – March 2006

Andy Jassy
CEO of AWS

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CLOUD WARS

The Emergence
of Cloud Wars

17
 Microsoft and Google follow Amazon’s lead

> >
2006 2010 2013
2006 2008 2010 2010 2013 2014

Google Google Windows

AWS re- Google Microsoft
launches launches Azure
launches releases launches
Google Google renames to
with SQS, S3, Google App Windows
Cloud Compute Microsoft
and EC2 Engine Azure
Storage Engine Azure

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CLOUD WARS

The Dominance of
Amazon Web Services

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The virtuous cycle of cloud computing
Lower prices
attract more
customers

Lower unit costs More customers

allow for lower utilize more
customer prices resources

Buying more Greater utilization

infrastructure in of resources
volume leads to requires more
lower unit costs infrastructure

Source: https://cloudblogs.microsoft.com/ 20
AWS offers ~140 services across 19 categories

Source: https://aws.amazon.com/products/ 21
AWS maintains a third of cloud market share

13% Azure

AWS 33%

GCP
6% 48% Others

Source: Synergy Research; IaaS & PaaS Markets 22

AWS is the 5th largest enterprise tech company
$102.3

$79.1

$38.9
$26.5
$17.5

Microsoft IBM Oracle SAP AWS

Source: SEC.gov; Annual revenue in billions, Q1 2017 – Q4 2017 23
 AWS ACKNOWLEDGES GROWING COMPETITION

“There won’t be just one successful player. There won’t be 30 because scale really
matters here in regards to cost structure, as well as the breadth of services, but there
are going to be multiple successful players, and who those are I think is still to be
written. But I would expect several of the older guard players to have businesses here as
they have large installed enterprise customer bases and a large sales force and things of
that sort.”

Andy Jassy
CEO of AWS

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CLOUD WARS

The Enterprise Expertise of

Microsoft Azure

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Hybrid-cloud remains a priority for businesses
Old IT New IT Reality Implementation Workload Placement

Physical Hybrid Cloud Off-Premise, SaaS: Office 365

Servers and Public Cloud
Virtual PaaS: Azure
Machines
IaaS: Azure
On-Premise,
Non-Cloud
On-Premise, Optimized for
Private Cloud large, unique,
and/or
sensitive
workloads

Source: https://cloudblogs.microsoft.com/ 26
VMs are often less expensive on Azure
Type Virtual CPUs Memory AWS Azure GCP

2 8GB $0.0928 $0.0850 $0.1070

General Purpose 4 16GB $0.1856 $0.1700 $0.2140

8 32GB $0.3712 $0.3390 $0.4280

2 4GB $0.0850 $0.0850 $0.0813

Compute Optimized 4 8GB $0.1700 $0.1690 $0.1626

8 16GB $0.3400 $0.3380 $0.3253

2 16GB $0.1330 $0.1330 $0.1348

Memory Optimized 4 32GB $0.2660 $0.2660 $0.2696

8 64GB $0.5320 $0.5320 $0.5393

Source: https://www.parkmycloud.com/cloud-pricing-comparison/ 27
 PRICING SIMPLICITY WITH AZURE

“In Azure, we bill all virtual machines (VMs) running Linux and Windows on a per-minute basis,
rounded down to the nearest minute. We only charge for the full minutes you use. This saves
you money and simplifies your bill.

In addition, Azure led the industry with a new service called Azure Container Instances (ACIs) that
realizes the true value of a per-second billing model. ACI offers containers that start in seconds
and are billed per-second without any infrastructure management.” – October 2017

Arpan Shah
General Manager at Azure

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Azure has data centers in more regions globally
Current Regions

Upcoming Regions
10

4
3

19 44 17
AWS Azure GCP
Source: Respective Cloud Websites 29
Azure breaks ground in South Africa and UAE

Source: https://azure.microsoft.com/en-us/global-infrastructure/regions/ 30
CLOUD WARS

The Long Game of

Google Cloud Platform

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GCP known for its content delivery network

Source: https://cloud.google.com/about/locations/ 32
Google continues to invest in subsea cables

Source: https://www.blog.google/products/google-cloud/expanding-our-global-infrastructure-new-regions-and-subsea-cables/ 33
migrates from to

Following AWS, Google Compute Engine

also moves to per-second billing
September 26th, 2017

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Google backs more open source projects

Source: https://opensource.google.com/projects/ 35
GCP bets on machine learning at the edge

Cloud IoT Core

Edge TPU
Source: https://cloud.google.com/edge-tpu/ 36
GCP ranks higher in customer satisfaction
4.5
4.4

4.1

AWS Azure GCP

Source: https://www.gartner.com/reviews/market/public-cloud-iaas 37
 GCP PLAYS THE LONG GAME

“We’re playing the long game. This thing is early. Some

people estimate that only 10 percent of workloads are in
the big public clouds. And if it’s not in a public cloud, it is
going to be in a public cloud.” – July 2018

Diane Greene
CEO of Google Cloud

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CLOUD WARS

The Rise of
Multi-Cloud Strategies

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 SNAP FINDS SUCCESS WITH ITS MULTI-CLOUD STRATEGY

“We’ve been able to moderate user cost growth through the successful
execution of our multi-cloud strategy. Specifically, hosting costs per user
dropped from $0.72 a year ago to $0.70 in the quarter.

That’s great progress in a year when our sales have more than doubled and
engagement metrics have grown substantially.” – February 2018

Drew Vallero
Former CFO of Snap

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Multi-cloud discussed more on earnings calls

Quarterly mentions of ‘multi-cloud’ or ‘multi cloud’ on earnings calls, Q4 2013 – Q2 2018 / Represents the quarter in which the earnings call took place 41
Containers facilitate multi-cloud adoption

Containers offer
developers and system
admins the ability to
segment applications into
microservices.
Containers are
lightweight, which makes
them less resource
intensive and portable
across cloud platforms.

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GCP offers open source containerization tools

> >
July 2015 May 2017 July 2018
Kubernetes v1.0 Istio v0.1 Knative

Kubernetes manages containerized
applications across multiple hosts,
providing basic mechanisms for
deployment, maintenance, and
scaling of applications.
Istio is an open-source framework for
connecting, managing, and securing
microservices across heterogeneous
clouds, platforms, and vendors.
Knative is an open source software
layer that helps developers and
system admins deliver serverless
functions to developers on any
cloud.

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 GCP ACKNOWLEDGES MULTI-CLOUD ADOPTION

“8 out of 10 enterprises today have a multi-cloud strategy … The move to

software containers has helped in simplifying and speeding up how we
package and deliver software … And as Sundar mentioned, 4 years ago we
released Kubernetes … today it’s by far the most popular way to run and
manage containers.” – October 2017

Urs Hölzle
SVP at Google Cloud

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The private market multi-cloud ecosystem

Private companies that raised equity financing between 6/24/2016 – 6/24/2018 45

CLOUD WARS

Funding Valuation

$240 Million $1.3 Billion

Docker is a provider of
containerization products and
services.
Developers and system admins
use Docker to build, ship, and run
distributed applications on-prem
or in the cloud.

Backed by:

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 DOCKER CONTAINERS ARE PORTABLE ACROSS CLOUDS

“With an estimated 85 percent of today’s enterprise IT organizations employing a multi-

cloud strategy, it has become more critical that customers have a ‘single pane of glass’
for managing their entire application portfolio.

[Docker] delivers on the promise of the cloud by offering customers the portability
benefits of containerized applications and the portable management of those
containerized applications across all infrastructure.” – June 2018

Scott Johnston
CPO of Docker

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Docker is the most used container tool today
49%

35%
27%

13%

2015 2016 2017 2018

Respondents of RightScale’s State of the Cloud Report from 2015 – 2018 48
CLOUD WARS

Shifting
Power Dynamics

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Amazon creates a conflict of interest for AWS
Microsoft and Walmart team up to
take on Amazon
July 17th, 2018

Diane Greene announced a major

win over Amazon: Target is using
Google’s cloud
July 24th, 2018

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Azure and GCP acquire more cloud companies
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3 2018 Acquisitions
5
20
4 2017 Acquisitions
3
15 1
6 2016 Acquisitions
1 6
10
5 4 2015 Acquisitions
6
5 2
6 2014 Acquisitions
3
3
0 1 1 2013 Acquisitions
AWS Azure GCP
Quarterly mentions of ‘multi-cloud’ or ‘multi cloud’ on earnings calls, Q4 2013 – Q2 2018 / Represents the quarter in which the earnings call took place 51
CLOUD WARS

Funding Valuation

$350 Million $7.5 Billion

GitHub is a version control and

source code manager for more
than 28M developers worldwide.
The company boasts 57M+
repositories and $100M+ in
annual recurring revenue from
enterprise customers.

Acquired by:

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Azure applies for more cloud patents than AWS
Amazon
Microsoft
Google

Total patent applications including “cloud” by application date, 2013 – 2018 YTD (7/20/2018) 53
Azure and GCP growth is ~2X that of AWS
98%
85%

45%

AWS Azure GCP

Source: Canalys; Estimated IaaS growth year-over-year, 2016 – 2017 54
55
Questions?
Twitter: @judwaite
jwaite@cbinsights.com

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Jud Waite – Senior Analyst, TMT

jwaite@cbinsights.com

@judwaite

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