In 2016, Thomas Friedman published Thank You for Being Late, an analysis of accelerating forces that are reshaping our world in the 21 Century. The three fields he covers are Computer Technology, Globalisation, and the Environment. He cites, the exponentially accelerating power of the microchip, the growth in size of memory units, the speed and reach of networking systems, the plethora of new software applications and the spread of sensors. All these come together to allow a new service to be offered; The Cloud.
The Cloud is an outgrowth of the service of Outsourcing but is much more powerful and much more complex. As Wikipedia puts it: “Cloud computing is the on-demand availability of computer systems resources, especially data storage and computing power, without direct active management by the user.” The services provided by the Cloud can be as simple as data storage and as complex as an entire platform of computer services, including data storage, operating systems, security and application programs. Cloud Computing allows the user to give the maintenance and running of its computer operations to a Cloud provider and to pay for it as a subscription fee. Not only does this transfer responsibility for maintenance and updating of the computer services from the user to the Cloud Provider, but it typically reduces computing costs substantially. This field is one of the fastest growing segments of the computer industry. It is also extremely competitive with many participants providing components of Cloud services.
The Evans Strategic Communications Group provides rankings of the top Cloud Providers by revenue in its CloudWars Rankings.
The top rankings for calendar 2019 show:
Microsoft as Number 1 with revenue of $44.7 billion, followed by Amazon AWS with $34.8 billion, IBM with $21.2 Billion, Salesforce with $17.1 billion and Google with $8.9 billion.
Microsoft has just overtaken the number 1 spot from the leader for several years, Amazon’s AWS. According to Cloudwars, Microsoft is now growing faster than AWS (39% annually over 37%). IBM’s growth rate is substantially less at 14% but has improved in 2019.
Further a survey of CIO’s shows Microsoft’s Azure is now more popular than AWS.
In 2014, Satya Nadella succeeded Steve Ballmer as the CEO of Microsoft. Prior to his appointment he was the executive vice president of Microsoft’s Cloud and Enterprise group. A major focus of Nadella’s regime has been the steady improvement and expansion of AZURE, Microsoft’s Cloud services.
In the 2019 annual report, Nadella explains why Azure has been so successful.
Microsoft has a strong focus on the needs of its customers. “Our mission (is) to empower every person and every organization on the planet to achieve more”.
“ Today, every company is a technology company, and every organization will increasingly need to build its own proprietary technology solutions to compete and grow.”
“Our commitment to our customers success is resulting in deeper partnerships, larger, multiyear cloud agreements and growing momentum across every layer of our differentiated technology stack- from application infrastructure, to data and Artificial Intelligence., to business process, to productivity and collaboration.”
“Today, 95% of the Fortune 500 trust Azure for their mission critical workloads.”
“Azure is the only Cloud with limitless data and analytics capabilities across our customers’ entire data estate.”
“(Our) responsibility is about earning and sustaining the trust of the customers and partners we empower”. “There are three pillars to our approach: privacy, cybersecurity, and responsible AI.” We have added three new services this year: Microsoft Threat protection, Azure sentinel, and Azure Confidential Computing.”
We believe that Microsoft’s strong focus on its customers needs, and in particular the growing initiatives to ensure trustworthiness of its Cloud services are major reasons why its is forging to the lead in Cloud services.
IBM was the early leader in providing Cloud services. But it lost that lead first to Amazon’s AWS, and recently to Microsoft’s Azure.
IBM’s mission throughout its life was established by Thomas Watson to be the provider of “BIG Solutions to the problems of Big Business with innovative technology. This is still its mission and it has served it well through the years. It has allowed IBM to establish a dominant position in providing technology services to big business and to build a virtually impregnable moat around this business, that has held up until recently. Today there are signs of leaks in the moat. “We think IBM’s moat is deteriorating as the cloud transition chips away at IBM’s competitive advantage associated with customer switching costs.” writes Morningstar’s Julie Sharma.
Nevertheless, there is some hope that IBM may be again righting the ship. On October 28, 2018, IBM announced the acquisition of Red Hat, ”the world’s leading provider of open source cloud software”.
In April 2020, IBM announced changes in its leadership: Arvid Krishna, the architect of the Red Hat purchase and boss of BIG blue’s cloud and cognitive software unit, became CEO, and James Whitehurst, CEO of Red Hat, became the president of IBM. We see these steps as strong indicators of the importance to IBM of the acquisition of Red Hat.
Since the days of Lou Gerstner, in the 1990’s IBM has been dedicated to “opening the stack” and embracing open source computer technology. Red Hat is a leader in this aspect of Cloud computing. IBM believes that its acquisition will greatly strengthen it Cloud services. There is an indication in 2019 that this is already happening. In2019, IBM’s cloud revenue was $21.2 billion and grew at a 14% rate. While this was well below the growth rates of AWS and Azure, it represents a turn around at IBM and more may be expected in future years.
Kitty Flanagan’s take on security in the Cloud: The Importance of Security in the Cloud