Those looking for proof of the transformational power of the cloud needed only to listen this month as Microsoft CEO Satya Nadella announced to developers at the software giant’s Build 2018 conference that the company is opening Windows – specifically, to let them integrate functionality with products from the Seattle-based company’s competitors.
Aimed at boosting computing efficiency at what Nadella calls “the intelligent edge†– where the devices that make use of data collated in the cloud are seated – the move to distributed development marks a change in model for a company that built its business on proprietary control of the operating system underlying the personal computer.
Hardware Enhancements
Particularly telling? That Nadella offers as an example the linking of Microsoft’s Cortana digital assistant with Alexa, the rival sold and supported by online retail giant Amazon. Amazon subsidiary Amazon Web Services (AWS) holds a dominant share of a market for cloud services that Microsoft and others – including Google, which alongside AWS and Microsoft is the third of the Big Three cloud providers – are keen to erode.
The routes they are taking underscore still further the cloud’s transformational capabilities.
Last week, Google released the third iteration of processing hardware at its own developer gathering, Google I/O 2018, held at the search engine giant’s headquarters in California. The TPU 3.0 chip is built on Google’s proprietary Tensor framework that enables developers to create machine-learning tools for use with data flows from Google Cloud, its cloud services subsidiary. Through such hardware enhancements, including the introduction of liquid-cooled data centers, Google and and its rivals are looking to lock customers into subscriptions for hosted processing and storage.
Given the dynamics of the fast-growing market for cloud services, it’s not surprising that providers are taking divergent approaches to good effect.
Lagging Competitors
AWS, whose operating income contributed some three-quarters of the $1.9 billion earned by its parent in the first quarter of 2018, owns around a third of the public cloud. Microsoft’s cloud businesses turned over $6 billion, outpacing AWS ($5.4 billion) thanks to its prevalence in software-as-a-service cloud offerings for enterprise users. Although Google doesn’t break out cloud revenues, the $4.4 billion it earned from activities other than search-driven advertising rose 36% year-on-year in the first quarter.
Born out of the selling of e-commerce software to third-party merchants and launched initially in 2002, AWS essentially pioneered the infrastructure-as-a-service segment of a cloud marketplace that last year was worth $180 billion worldwide, according to Reno-based Synergy Research Group. While significant, and with growth rates that outpaced those at AWS, competitors across the cloud spectrum such as Oracle, IBM and China’s Alibaba have yet to threaten Amazon’s dominance, whose earnings routinely exceed those of the next four biggest competitors combined.
Last year, AWS introduced more than 1.400 new features and services, extending its streak of consecutive quarters with at least a third of the overall cloud market to 12, according to Synergy.
Introducing the Intelligent Cloud
Hence the decision by Microsoft to open its flagship operating system to external developers for the creation of what Nardella calls “multi-sense†applications that tie the intelligent edge together with an “intelligent cloud.†Coupled with a push to augment the company’s Office 365 bundled software product to the level of operating system for devices, including enhancements for near- and far-field communication, Microsoft’s drive to integrate the platforms that support personal digital assistants illustrates its aim to separate advanced technologies from the devices on which they operate – as well as to cash in on the consumer trend driving uptake of the public cloud.
Google offers users a similar product, the Google Assistant, which earlier this month announced that the number of devices with which it integrates now tops 5,000, representing a threefold-plus increase in just a few months and a total that Google compared with the 4,000 devices that it said could integrate with Alexa.
Amazon’s quick rebuttal – it says Alexa now integrates with 12,000 devices – as well as the divide arising from a decision to not offer smart-home devices from Google-owned Nest on its e-commerce portal make collaboration of the kind it enjoys with Microsoft appear a non-starter. That both Microsoft’s Build and Google’s I/O events this year were scheduled on the same day appears to be no coincidence.