PaaS market share – Cloud Computing Today

A recent article by the Synergy Research Group (Synergy) claims that Amazon Web Services continues to dominate the IaaS and PaaS space in terms of revenue. According to Synergy, Amazon Web Services increased its quarterly revenue by 55% to over $700M in Q3 of 2013, whereas the aggregate of revenue for Salesforce, IBM, Windows Azure and Google was less than $400M for the same time period. Worldwide, total IaaS and PaaS revenues exceeded $2.5 billion for the quarter, with IaaS accounting for 64% of cloud revenues, a surprisingly small proportion given the limited penetration of platform as a service within the enterprise. Synergy Research’s John Dinsdale remarked on the company’s findings as follows:

We’ve been analyzing the IaaS/PaaS markets for quite a few quarters now and creating these leadership metrics, and the relative positioning of the leaders really hasn’t changed much. While Amazon dwarfs all competition, the race is on to see if any of the big four followers can distance themselves from their peers. The good news for these companies and for the long tail of operators with relatively small cloud infrastructure service operations, is that IaaS/PaaS will be growing strongly long into the future, providing plenty of opportunity for robust revenue growth.

Here, Dinsdale remarks that the “race is on to see if” Salesforce, IBM, Microsoft and Google can decisively secure second place in the battle for IaaS/PaaS market share. Strikingly, Microsoft, Google and IBM have revenues that are very close to one another, even though one might reasonably expect Microsoft’s Azure platform to edge out its competition given its earlier entry into the market than IBM and Google’s Compute Engine (GCE). That said, IBM’s sizeable IaaS revenue derives largely from its acquisition of SoftLayer, which itself had a rich and venerable history that predated IBM.

Synergy’s chart illustrating Q3 IaaS and PaaS revenues is given below:

Notable omissions from the findings include Rackspace, HP, Oracle, Pivotal One and Red Hat, the middle three of which (HP, Oracle and Pivotal One) are still relatively nascent, and hence justifiably excluded from the present calculation. As Dinsdale notes above, however, “the good news for these companies” and for remainder of the space is that revenues are set to increase significantly in the near term. Going forward, one of the key questions for subsequent IaaS market share analyses will be whether OpenStack’s momentum and gradual maturation propels disproportionate growth amongst OpenStack-based cloud platforms for vendors such as HP, IBM, Oracle, Rackspace and Red Hat.

NephoScale became the latest IaaS vendor to use Cloud Foundry as the basis for a Platform as a Service offering by announcing the Beta release of CloudPaaS, today. CloudPaaS supports Ruby, Python, PHP and Java/Spring in addition to database services that include MySQL. CloudPaaS allows NephoScale customers to take advantage of preconfigured application stacks for development without the challenges of provisioning and configuring infrastructure prior to deploying a platform for application development. Like many IaaS-PaaS bundles, CloudPaaS intends to entice customers to take advantage of the company’s NephOS IaaS platform as customers become familiar with its platform and customer service.

James Watters, Head of Cloud Foundry Product, Marketing and Ecosystem at Pivotal, remarked on the significance of NephoScale’s selection of Cloud Foundry version 2 as the basis for CloudPaaS as follows:

Hosting providers are increasingly adopting Platform as a Service in response to developer demand. Cloud Foundry dramatically lowers the barrier for ecosystem participation in the PaaS market to meet the growing demand from developers. NephoScale’s decision to leverage Cloud Foundry supports our vision to deliver a platform that significantly reduces development cycles and accelerates time to market for developers and cloud operators alike. Enterprises seeking to leverage Cloud Foundry can now consider NephoScale for both public and private deployments.

Here, Watters elaborates on how Cloud Foundry “lowers the barrier for ecosystem participation in the PaaS market” in a way that renders it increasingly difficult for specialized PaaS vendors to compete against a commercialized PaaS offering based on Cloud Foundry. Bolstered by partnerships with IBM, Piston Cloud and VMware, Cloud Foundry’s rise in the PaaS space has been remarkable in recent months, particularly given news of its integration with OpenStack and the associated announcement that Piston’s Joshua McKenty would join its advisory board. The key question for the PaaS space now is whether private, proprietary PaaS vendors will be able to gain traction or whether Cloud Foundry-based PaaS platforms will become the de facto standard given the promise of their interoperability with other Cloud Foundry-based products and integration with OpenStack.