- The global cloud competition is driven by several factors, including the increasing demand for cloud services, the emergence of new technologies, the expansion of global infrastructure, and the development of new services.
- Market players are investing heavily in innovation, forming strategic partnerships, and improving their services to gain a larger market share and stay ahead of the competition.
- This article highlights the moves companies are making to withstand the growing competition in the global cloud market.
The global cloud computing market is becoming increasingly competitive, with many players vying for a market share. According to an October 2022 report by Gartner, the global public cloud investment in 2022 was around $490.3 billion and is expected to reach $591.8 billion in 2023, with a growth of about 20.7%.
Major global cloud service providers (CSPs), such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform, have been expanding their operations across geographies. Meanwhile, small cloud providers such as Alibaba Cloud, Huawei Cloud, Tencent Cloud, and Baidu Cloud have also been gaining traction.
The competition is driven by the increasing demand for cloud services, the emergence of new technologies, the expansion of global cloud infrastructure, the development of new services, and so on. Global businesses in the region are looking to leverage cloud technology to improve their operations, reduce costs, and gain a competitive edge.
To stay ahead in the race, cloud providers are investing heavily in building data centers, expanding their service offerings, and forming strategic partnerships with local businesses. Let’s understand each of these tactics in detail.
1. Infrastructure Expansion
Cloud providers are investing heavily in expanding their infrastructure, including building new data centers and expanding existing ones. This helps them provide better service to their customers by reducing latency and increasing speed.
In November 2022, AWS launched its cloud infrastructure in Spain to allow organizations of all sizes in the region to fast-track innovation, speed up business processes, and offer customers better experiences. To compete with AWS, Microsoft has also been investing heavily in its infrastructure to expand its global footprint. According to Microsoft’s recent data, its new data center in Mexico is set to start operations by the end of 2023. This expansion was a part of Microsoft’s $1.1 billion investment plan to establish the first cloud region in Mexico.
In September 2022, Alibaba Cloud unveiled its plans to expand its cloud operations in the APAC (Asia-Pacific) region by investing around $1 billion in cloud technology. Additionally, in November 2022, Huawei, which currently serves Thailand and Malaysia, revealed its plans to invest $300 million to expand its cloud base in Indonesia.
2. Development of New Services
Cloud providers are expanding their offerings beyond traditional infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) to include software-as-a-service (SaaS) and other cloud-based services across geographies. Introducing new services helps customers migrate their applications to the cloud and manage them more efficiently.
For instance, in 2019, AWS introduced AWS Outposts to extend AWS infrastructure and services across any data center or on-premises location. Moreover, AWS has launched Amazon Elastic Kubernetes Service (EKS), a managed service that makes it easy to deploy, manage, and scale containerized applications using Kubernetes. Microsoft Azure has launched Azure Site Recovery, a disaster recovery solution that helps customers recover their applications in case of an outage.
3. Strategic Partnerships With Competitors
Strategic partnerships with competitors are increasingly being used in the global cloud industry to offer customers more comprehensive and integrated solutions. These partnerships involve two or more cloud service providers coming together to offer joint services or integrate their respective platforms.
For instance, in July 2022, Oracle Corp and Microsoft Corp announced a cloud integration move that would allow Azure users to run Oracle services via Oracle Cloud Infrastructure (OCI). Similarly, AWS has partnered with VMware to offer VMware Cloud on AWS, a service that allows customers to run VMware workloads natively on AWS.
Microsoft Azure has partnered with SAP to offer SAP solutions on Azure, including SAP HANA and SAP Analytics. Google Cloud has partnered with Cisco to offer the Cisco Hybrid Cloud Platform for Google Cloud, a solution that allows customers to run their applications on-premises and in the cloud.
Such partnerships allow cloud service providers to offer customers a wider range of services and a more seamless experience.
4. Investment in Emerging Technologies
Market players are investing heavily in emerging technologies, such as artificial intelligence, machine learning, and the IoT, to offer their customers the latest technologies and services. For example, in April 2019, Google Cloud launched Anthos, a hybrid and multi-cloud platform powered by Kubernetes that enables customers to build and manage applications across multiple clouds.
AWS isn’t far behind in the race as it has already invested in several new services like Amazon SageMaker, a machine learning service, and Amazon Rekognition, an image recognition service. AWS is also focusing on developing new services that can help customers run their applications on a hybrid cloud architecture.
5. Competitive Pricing
Cloud providers are also competing on price, offering competitive pricing models such as pay-as-you-go, reserved instances, and volume discounts to attract customers and retain market share. In April 2023, Alibaba Cloud announced that it would cut prices for its products and services by up to 50% to cope with rising competition and, in turn, expand its market share.
According to the data outlined on Alibaba Cloud’s website, the costs for elastic computing services leveraged through Arm and Intel-based chips will decrease by 15% to 20%. On the other hand, services reliant on NVIDIA-based V100 and T4 graphics processors will see a price cut between 41% to 47%.
According to the February 2023 analysis published by Wall Street Journal, Chinese cloud providers tend to offer prices between 20% to 40% lower than American providers to reduce the competition.
According to an April 2023 report by Gartner, worldwide end-user spending on public cloud services is set to increase from $491 billion in 2022 to $597.3 billion in 2023. As the cloud continues to drive digital businesses globally, cloud providers are embracing emerging technologies like generative AI and IoT. Moreover, market players are making strategic moves to stay relevant during this period of intense competition in the cloud computing space.
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