Will coronavirus compound the concentration of cloud computing champions?

With COVID-19 forcing more people to work and entertain themselves at home, the cloud segment has been profiting. But it is debatable as to whether these riches are being evenly spread.

Although many would presume cloud is now a mainstream concept in the business world, it still accounts for less than 5% of total IT budgets. It will of course never be 100%, but this is a remarkably low percentage for how many companies who boast about how forward-looking and innovative they actually are.

The coronavirus has not only forced a new social dynamic, but also coerced traditional organisations through digital transformation projects.

This is of course an opportunity for the cloud companies, but you have to question whether this bounty will be distributed across the market, or whether it will be concentrated at the top, extending the lead which the likes of AWS, Microsoft, Google and Alibaba have worked over the chasing peloton, featuring companies such as IBM, Rackspace and Oracle.

Will everyone benefit, or just the market leaders?

Cloud computing market share by period
Company Q1 2020 Q4 2019 Q1 2019
AWS 32% 32% 33%
Microsoft Azure 17% 18% 15%
Google Cloud 6% 6% 5%
Alibaba Cloud 6% 5% 5%
Other 38% 39% 42%

Source: Canalys

The data above suggests the cloud profits are being increasingly concentrated at the top. This data will not make a comfortable read for niche cloud companies, but there is always hope. One of COVID-19’s success stories has elected to go outside market leadership to scale its offering.

Despite poor security credentials, suspect ties to Chinese ownership and misleading statements made by the management team, Zoom is proving to be one of the bolters of 2020. Thanks to enforced work from home trends and keeping in touch with friends and family during lockdown, usage of Zoom’s video conferencing services is skyrocketing.

The more popular Zoom becomes, the more cloud capacity the business would need, and Oracle won the race to secure the popular video conferencing company as a customer. High value customers are of course very beneficial to the financial spreadsheets, but it provides more confidence for other potential customers to sign on also.

Interestingly enough, Oracle sits outside the leaders in the cloud computing segment. Most would have assumed Zoom would select one of AWS, Microsoft or Google to scale services, but in electing for Oracle perhaps this is evidence the fortunes of coerced digital transformation are being spread proportionally.

How this money is being distributed through the community is a bit unknown for the moment, though it is clear companies are being forced through a digital transformation project.

“Up to now, there has been a tendency to not be fully committed to cloud,” said Nicholas McQuire, SVP and Head of Enterprise Research at CCS Insight.

This is an issue in itself. As McQuire highlights, many companies are being forced to rush into decision making to ensure business continuity, but this might only be a short-term gain with a recession looming on the horizon.

As with every period of recession, belts are tightened as profits are protected. This can mean certain projects are cut back, or expenditure is rationalised. This could be a problem for the niche players in the cloud ecosystem, according to McQuire.

Multi-cloud will of course persist, but some companies may well sacrifice best-in-class purchases in pursuit of greater procurement value. For example, Microsoft and Google might look like very attractive cloud vendors as on top of the storage components, these companies can also offer productivity services such as desktop virtualisation.

“As a niche provider in a time of recession, you have to provide immediate business value above what is being offered elsewhere in the market,” said McQuire.

This may well prove to be a challenge for smaller players in the market, such as Rackspace or IBM, but it could prove to be an advantage for the likes of Microsoft, Google and AWS, all of which offer very broad services, across numerous business criteria. It could look very attractive to a company which is being forced through a digital transformation process at a time where profits are likely to be limited.

Interestingly enough, AWS might be a company to keep an eye on in this space. Amazon Chime, WorkDocs, and WorkSpaces are all productivity and collaboration tools offered by the company but are rarely pushed. During the most recent earnings call, they were all explicitly mentioned suggesting the productivity and collaboration could be an element of the Amazon war chest to get an upgrade during this period.

Looking at the financial statements of these companies, this is an assumption which is holding strong:

Quarterly financial gains for cloud giants
Revenues Year-on-year
AWS $10.2 billion 33%
Microsoft (Productivity) $11.7 billion 15%
Microsoft (Cloud) $12.3 billion 27%
Google Cloud $2.7 billion 52%

At Microsoft, Teams is a draw for decision makers on top of the Azure services, as would Dynamics, while the same could be said for Google and its G-Suite offering. The rationalisation process might help the big boys at the top of the pile, but with new companies entering the cloud space, familiarity might also help.

Companies like Oracle and Workday might enjoy success and capture newly created revenues as there are existing relationships in place with products such as Enterprise Resource Planning (ERP) and Human Capital Management (HCM). Companies who are not as cloud savvy as others already purchase this software and may well turn to their existing suppliers to help.

One final element to consider during this period is free offers.

Turning back to the Amazon earnings call, the team has said small businesses would be able to use certainly toolsets for free for a 12-month period. This is somewhat of a loss leader position to take, which will certainly be attractive to some decision makers. Major players might be able to offer such promotions due to diversity of revenue streams, bulging bank accounts and engaged investors, however niche players might be more reliant on cash moving through bank accounts.

It might not be the best way to win business, but the big players might just be able to undercut rivals at a loss and outwait the market.

More money in the cloud computing market might seem like a good thing on the surface but pay closer attention to where the money is actually going. AWS, Microsoft, Google and Alibaba have already worked a considerable lead over the chasing peloton of less successful cloud companies, though this could be extended if the fortunes are disproportionately directed towards the top.

Some might say this is due to tactical as opposed to strategic expenditure during a period where time is a luxury few decisions makers have when rapidly undertaking a digital transformation programme, but with the risk of supplier rationalisation on the horizon, it might not get any easier for the niche cloud players.

Who is set to benefit from the COVID-19 outbreak?

For millions of individuals and businesses, the threat of COVID-19 is financial ruin, but there are parts of the technology industry that are benefiting from the considerable changes forced on society.

The FTSE 100 Index is likely to close below 5,000 today, a 27% decline in a month, while the Dow Jones is currently down (at the time of writing) 31% over the same period. Economies around the world are being hit disastrously hard, but some will see gains out of this pandemic at least temporarily, if not permanently.

Cloud Computing

The cloud computing segment has been on the rise for years, though as more employees find themselves restricted to their homes more workloads will have to be migrated to the cloud to ensure the business can function as usual.

For the cloud companies, the coronavirus outbreak is effectively forcing some organisations through a very rapid digital transformation project, to embrace the cloud and mobility trends. From an IaaS perspective it means more money, from SaaS it means more engagement and PaaS more opportunity.

Amazon Web Services, Microsoft Azure and Google Cloud are the obvious beneficiaries as market leaders, though for companies like Oracle, who might be working with more traditional industries that have resisted evolution to date, new conversations about enabling the workforce will have to occur.

Interestingly enough, once these businesses have begun their journey towards a cloud-based business model and environment, it is highly unlikely they will go into reverse. This could be a catalyst for accelerating the already fast-blossoming cloud segments.

Video conferencing and collaboration

Although there is no substitute for a face-to-face meeting to progress and complete complicated projects, alternatives have to be sought today. Many businesses are encouraging more meetings to be conducted via video links rather than email to not only ensure effective communication but ensure well-being of employees. Contact with colleagues via video link is not perfect by any stretch, but it might assist some who are feeling the loneliness of remote working.

Microsoft is an obvious beneficiary here, it announced last week the number of daily active users for its Teams collaboration suite increased by 12 million, though there are many others who are financially better off also.

Zoom Video Communications, a remote conferencing services company headquartered in San Jose, has seen share price increase 130% since the beginning of the year, while more marketers are turning to companies like ON24 to purchase webcasting and webinar services to ensure lead generation projects can continue.

As mentioned above, some companies are being forced into a digital transformation project meaning some of the remote working capabilities might be retained in the long-term, but virtual alternatives are never going to be a complete replacement for face-to-face meetings, where we can subconsciously pick up non-verbal communication cues so easily.

Electronic payments

The likes of Visa, Mastercard and AMEX are already benefitting from long-standing trends where physical cash is quickly becoming a thing of the past, though the COVID-19 outbreak could accelerate this.

In the short-term, some shops are now only accepting digital payments, though as the total number of transactions are decreasing, so will revenues. That said, in the long-term it could force customers into adopting digital payments.

Although cash is quickly becoming a thing of the past, some from the traditional generations still resist the use of digital currency. The chequebook took years to fall out of common usage as banks and shops were still compelled to accept such payment when offered. The same could be said of physical cash; as long as some still want to use it, it will persist. But in refusing to accept physical payments, shops are forcing some individuals to adopt digital payments.

This is not a likely to be a permanent change for all, but it might be for some, both in terms of consumers who adopt digital payments and the shops who will now only accept digital currency.

Ecommerce

The more people are at home bored, the more likely fingers are going to venture towards the eCommerce apps to spend the money which has been saved from not going to the pub. Your correspondent’s household has turned into a satellite Amazon storeroom thanks to certain individuals in the flat.

Streaming, gaming and video content platforms

This is perhaps the most obvious example of a beneficial segment.

In terms of video streaming, parents will need to occupy children, while adults will also need entertaining as pubs, clubs, theatres, parks, beaches, holidays and gigs all disappear. Netflix is already immensely popular, but with more people stuck at home in the evenings, it may well become more so, but this benefit is not limited to the content king. All streaming platforms could benefit, while Disney+ is launching at a good time to capture the attention of European consumers.

In terms of video platforms outside of streaming, YouTube is enjoying particular success. Not only are there those who are trying to entertain themselves, but there is also millions of hours of information (some much more accurate than others) on the pandemic itself.

From a gaming perspective, this is back to the boredom conundrum. With the usual entertainment venues shut down, consumers will need to be entertained. The likes of Microsoft Xbox, Google Stadia and PlayStation are likely securing additional subscriptions as well as in-game purchases.

Savvy corporates

For those corporations who in a more fortunate cash position than others, the shock to the financial markets could be viewed as an opportunity. Softbank is a perfect example.

Today (March 23), Softbank announced it was selling off certain unnamed assets to fund a second share buyback programme. Combined with the first announced on March 13, Softbank will be able to retire 45% of Softbank shares which are currently on the open market.

Generally speaking, the fewer shares which are on the open market, the less exposed a company is to external influences. All you have to do is look at the conflict between Elliott Management and Twitter/AT&T/Telecom Italia to see what influence an activist investor can have on a business where share price has taken a decline. Share buyback programmes could be viewed as a way to protect a corporate strategy from short-term influences and aggressive investors.

Online grocery delivery

With the rush on supermarkets persisting as the days turn into weeks, online grocery delivery companies are seeing a surge in popularity.

Online shopping delivery service Ocado suspended its website last week, telling customers demand exceeded its capacity to deliver. The firm has said it would fulfil its orders and will soon reopen, with rations placed on certain food items. Share price for Ocado has surged this month, though it did decline once it announced it would temporarily stop taking orders.

The telecommunications industry

The telecommunications industry is critical to today’s society functioning seamlessly, though it has traditionally been ignored. Consumers have simply expected the internet to work without appreciating the importance of the telecommunications industry. Telcos are viewed as boring companies, paid little attention in everyday life.

Thanks to the number of people attempting to entertain themselves, work from home or access educational resources the telco industry has been thrust into the limelight. Authorities are putting in measures to protect these valuable assets, not only to ensure consumers are able to continue their daily lives but so emergency services can continue to function, or research labs can collaborate to create a vaccine.

The telco industry underpins the success of almost every element and facet of society, and now the networks are under pressure, everyone realises it.

AWS sues US Government for Trump hatred

Amazon has launched a legal challenge against the Department of Defense’s preference to Microsoft Azure, suggesting the decision is linked back to President Trump’s hostility towards CEO Jeff Bezos.

The animosity between the pair has been anything but private, and now it appears the public display of difference is causing complications for the White House. Amazon is suggesting the Department of Defense’s decision to award the $10 billion Joint Enterprise Defense Infrastructure deal, known by the acronym JEDI, to Microsoft was compromised by the actions of Trump.

“This case demands an expanded AR [administrative record] so that the Court may fully assess AWS’s well-grounded claims of bias and bad faith,” the filing states.

“President Donald J. Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to disrupt the orderly administration of government functions-including federal procurements-to advance personal motives. There is no question he did so here.”

Amazon is requesting greater access to internal documentation to further build a case against the US under the assumption the President’s hatred towards Amazon CEO Jeff Bezos saw pressure placed on the Department of Defense to award the contract elsewhere. Aside from Amazon and Microsoft, IBM and Oracle were also in the running for the cloud infrastructure and migration services contract.

The contract itself was awarded to Microsoft back in October, though it was not without controversy at the time. Several Senators wrote to President Trump asking the decision to be re-evaluated in favour of splitting the contract to more than one supplier. These pleas were ignored, and AWS even released a statement questioning the logic of the decision on the grounds it believed it was the market leader.

To make matters a bit messier, a Seattle Judge ruled Government employees were unfairly favouring AWS in July. This ruling followed a lawsuit filed by Oracle which claimed there were conflicts of interest with past employees which led to AWS gaining an upper hand due to the way the contract was drawn up.

This has been a scruffy process from start to finish, and thanks to the President’s apparent personal feelings towards Amazon CEO Jeff Bezos, it might be extended further.

The conflict between the two has been on-going for years, and AWS is now alleging the President pressured Government officials to ensure the Amazon company did not profit from Government contracts. The President reported ordered former Defense Secretary James Mattis to ‘screw Amazon’ out of the contract. Following these comments, procurement reports allegedly leaned towards Microsoft.

Amazon now claims the Department of Defense committed ‘numerous and compounding prejudicial errors’ which led to the team disfavouring AWS. These errors included relying on an outdated, superseded version of AWS’ proposal, misstating facts from the proposal, downplaying failures in the Microsoft proposal and fabricating areas of superiority in the final stages of evaluation to favour Microsoft.

This is only one incident, though Trump has a history of targeting Amazon and its CEO Jeff Bezos.

Prior to entering the White House, Trump had warned that it would be bad news for Amazon if he assumed power, while the filing aims to prove many of his actions have been used to punish enemies or advance his own personal agenda. The decision to award a $400 million contract to build the controversial wall to Fischer Industries and intervention to prevent the relocation of the FBI headquarters away from the nearby Trump International Hotel in downtown Washington are two more examples offered by AWS to demonstrate inappropriate influence and pressure from the Oval Office.

Another example is the removal of press credentials for CNN’s Jim Acosta just hours after the President branded the reporter a ‘rude, terrible person’. Although these examples are not directly relevant, if AWS is able to prove the President unduly influences Government decisions based on grudges or personal grudges it might be able to gain some traction.

The end game has not been explicitly mentioned in the filing, just that AWS lawyers want to begin a ‘discovery’ process which would be used to fuel future legal action. AWS clearly feels it has something to gain here, either by halting the President’s alleged bias against the firm or forcing the Department of Defense to restart the

Amazon and Microsoft are proving to be a different class in the cloud game

Amazon and Microsoft have unveiled bumper financial results and now it is over to Google to prove it can keep pace with the two clear leaders in the cloud segment.

For years, it was Amazon’s cloud business unit, AWS, which was incomparable to the rest of the cloud segment. No-one could get anywhere near this trailblazer, though Microsoft has closed that gap recently. The question is whether anyone else has? The likes of Google, IBM and Oracle claim to be in the same league, but there is little evidence to support this, but Google has a chance to set the record straight next week.

Amazon and Microsoft have now revealed their numbers for the final three-month period of 2019. The story is not quite complete without Google’s numbers, realistically the only competitor who has a credible claim to be in the same league, but the numbers are eye-watering.

At group level, Amazon increased revenues by 21% during the last quarter, with the cloud business bringing in $9.9 billion, an increase of 23% year-on-year. While net income only increased 19% to $2.6 billion, this was actually 79% of the total net income across the group. The cloud business unit at AWS is a profit machine.

Over at Microsoft, group revenues increased by 14% to $36.9 billion, while net income was up 38% to $11.6 billion. Revenue in the ‘Intelligent Cloud’ unit increased 27% to $11.9 billion with Azure’s revenue up 62% for the quarter. Cloud products and services of course factor into the other Microsoft business units, but the ‘Intelligent Cloud’ group is showing the most aggressive growth.

Business unit Total revenue Growth
Intelligent Cloud $11.9 billion 27%
Productivity and Business Processes $11.8 billion 17%
More Personal Computing $13.2 billion 2%

Although revenues are only one part of the picture, market share estimates also tell another story.

Looking at the most recent estimates from Synergy Research Group, Amazon is leading the cloud segment with 39%, Microsoft sits in second with 19%, Google is on 9% and 5% for Alibaba. Salesforce now has 4% and IBM is on 3%, while no-one else has more than a 2% share. These figures are for the Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) segments.

As mentioned before, the landscape is not complete until Google releases its numbers next week, though IBM and Salesforce have released theirs. At IBM, total cloud revenues stood at $6.8 billion, up 21% year-on-year, while Salesforce reported group revenues of $4.5 billion for the last quarter, an increase of 33%. These numbers are attractive, investors might well be pleased, but Microsoft and Amazon look like they are sitting alone in the top tier of the cloud industry.

Another factor to consider are the deal wins.

While Amazon has been hoovering up deals with SMEs and the emerging digital businesses, Microsoft has extensive existing relationships with almost every major corporation in the Western world. The firm claims to currently be working with 95 of the Fortune 100 companies on cloud infrastructure. These companies like the look of Microsoft, thanks to a stronger focus on hybrid-cloud, whereas Amazon has a better reputation for the speed and scale of cloud-only strategies.

During the last period, Microsoft secured the US Department of Defense $10 billion JEDI cloud contract, which will cover 1,700 data centres and the transition of millions of devices from on-premise servers to the cloud. AWS lost out on this deal, but it has got plenty of significant customer wins to boast of; Western Union, media firm Fox, the NFL, pharmaceutical giant Novartis and Best Western Hotels & Resorts.

Interestingly enough, the rapid expansion of these internet giants might well start to encroach potential revenues which have been earmarked for the telcos.

The last few months have not only seen CAPEX investment from the likes of AWS and Microsoft, but also picking up industry executives. An excellent example of this is Alex Clauberg, a former Deutsche Telekom executive.

As the connected world starts to spread to more corners of society and the ‘edge’ develops, there are plenty of opportunities for telcos to make more money from what is quickly becoming a commoditised service. However, there is no guarantee the newly created ‘service’ revenues will be reserved for the telcos themselves. Clauberg’s move is evidence the internet players are attempting to muscle in on telco revenues.

Clauberg is a well-known name in the SDN and NFV sector and is the current Chairman of the Telecom Infra Project (TIP). He was previously VP and CTO at T-Systems International, the global services and consulting arm of DT, but now works as Solutions Architects Leader, at AWS. There is not a huge amount of information as to what this new job actually is, but it is demonstrative of the ambitions of the likes of AWS in the telco world.

These are companies which are growing rapidly in their traditional playing grounds and pushing aggressively to steal profits in places they should be considered secondary. Google still has an opportunity to place itself at the top table of the profitable cloud segment, but it does look like AWS and Microsoft are in a league of their own.

Report: FTC expands scope of Amazon antitrust probe to include AWS

Amazon has been offered an early Christmas present from the Federal Trade Commission (FTC) by extending an existing antitrust probe to include its burgeoning cloud business.

According to Bloomberg, FTC investigators have begun questioning customers about AWS, allegedly focusing on whether the dominance of AWS is impacting competition in the cloud segments. While this probe does not necessarily mean any action against the company, Amazon executives will not be thrilled at the attention.

As it stands, AWS is the clear market leader in the cloud computing market, largely thanks to being first to market with services but also due to the significant infrastructure footprint it has developed over recent decades. Although estimates vary, AWS has been deemed the market leader, with just below 50% market share, with Google and Microsoft the other players with significant market share.

It is believed the probe is looking at how potential competitors interact with AWS customers and the company itself. One area the probe will address is whether AWS is effectively punishing software companies who work with its cloud rivals and incentivising others to work with AWS exclusively.

This investigation is part of a larger, sweeping trend with greater scrutiny being placed on Big Tech. Amazon’s retail business is at the heart of an existing FTC antitrust probe, while Google, Apple and Facebook are also facing their own competition investigations from a variety of authorities. Some might presume these enquiries are being made as the first steps towards diluting the influence of Big Tech, and in some cases, breaking-up the internet giants.

Although significantly younger than the retail business units of Amazon, AWS has been collecting the lion’s share of profits for the firm in recent years. Amazon was famously known as the technology giant which never generated profits, though that changed in recent years, partly thanks to the rise of AWS.

Looking at the most recent quarterly earnings report, total revenues for Amazon increased to $70 billion for the three months ending September 30, with operating income at $3.1 billion. AWS accounted for $2.2 billion of this operating income on net sales of $8.9 billion for the quarter. Across the year to date, AWS accounts for 61% of the total operating income of Amazon.

Antitrust probes are of course nothing new to Amazon, though a few executives and investors might get a bit twitchy that it is the profit machine which is facing enquiries now.

AWS helps Verizon, Vodafone, KDDI, and SK Telecom with their edge computing

Amazon Web Services has launched AWS Wavelength, which is designed to bring operators and app developers together at the edge of the network.

As the biggest public cloud provider it was only a matter of time before AWS made its edge move and this seems to be a big part of it. A major feature of 5G is low-latency communication, which dramatically reduces the lag between sending and receiving signals. However physical distance still introduces lag, which is where mobile edge computing comes in, but bringing services closer to the end user.

Part of the point of AWS Wavelength is so make it easier for developers to make apps that can exist on the edge of mobile networks, and thus make full use of the low-latency capabilities of 5G. It seems to have got off to a flying start, with Verizon, Vodafone, KDDI, and SK Telecom all having signed up on launch day.

“With Wavelength, we bring 5G and cloud together to give our customers the powerful new capability to run cloud services consistently within a few milliseconds of mobile end-users,” said Matt Garman, VP of Compute Services at AWS. “This is a game changer for developers that is going to unlock a whole new generation of applications and services. We are really excited to see our customers innovate with these unique new capabilities that they did not have access to before.”

“We are first in the world to launch Mobile Edge Compute — deeply integrating Verizon’s 5G Edge platform with Wavelength to allow developers to build new categories of applications and network cloud experiences built in ways we can’t even imagine yet,” said Hans Vestberg, CEO of Verizon. “Bringing together the full capabilities of Verizon’s 5G Ultra Wideband and AWS, the world’s leading cloud with the broadest and deepest services portfolio, we unlock the full potential of our 5G services for customers to create applications and solutions with the fastest speeds, improved security, and ultra-low latency.”

“With Europe’s largest 5G network across 58 cities and as a global leader in the Internet of Things with over 90 million connections, Vodafone is pleased to be the first telco to introduce AWS Wavelength in Europe,” said Vinod Kumar, CEO of Vodafone Business. “Faster speeds and lower latencies have the potential to revolutionize how our customers do business, and they can rely on Vodafone’s existing capabilities and security layers within our own network.”

“Having the power of the AWS cloud processing and storage services available at the edge of the KDDI 5G network enables us to accelerate IoT innovation for applications like high-definition VR video streaming, visual positioning service, smart factories, autonomous vehicles, and more,” said Makoto Takahashi, President of KDDI. “AWS Wavelength provides Japanese businesses and consumers immediate access to these services over the KDDI 5G network.”

“By combining the strengths of SK Telecom’s 5G network and AWS cloud, we are set to bring innovative changes to all individuals, businesses and industries,” said Ryu Young-sang, Head of the MNO Business at SK Telecom. “This collaboration enables exciting use cases like game streaming, headless robotics, Ultra High Definition interactive media, autonomous driving, and smart factories.”

Developments like this indicate the edge is rapidly becoming a mainstream commercial consideration as the telecoms and IT worlds try to work out whether 5G is worth the hassle. Verizon already has games developer Bethesda and the NFL on board to try out cool new low-latency use-cases and rival AT&T has already announced a similar initiative in partnership with Microsoft. Now let’s see if anyone makes any extra money out of it.

Amazon launches quantum computing service

Amazon Web Services (AWS) has announced the launch of Braket, a quantum computing service, as well as two research centres for the technology.

This is not to say the world will be revolutionised by quantum computing tomorrow, but the new service allows scientists, researchers, and developers to begin experimenting with computers from quantum hardware providers. As with anything AWS related, the economies of scale afforded through cloud computing services make the prospect of quantum computing more affordable for the ecosystem.

“With quantum engineering starting to make more meaningful progress, customers are asking for ways to experiment with quantum computers and explore the technology’s potential,” said Charlie Bell, SVP of Utility Computing Services at AWS.

“We believe that quantum computing will be a cloud-first technology and that the cloud will be the main way customers access the hardware. With our Amazon Braket service and Amazon Quantum Solutions Lab, we’re making it easier for customers to gain experience using quantum computers and to work with experts from AWS and our partners to figure out how they can benefit from the technology.”

Amazon Braket is a fully managed service is a single development environment which will allow customers to build quantum algorithms, test them on simulated quantum computers. This is the first-step in engaging the ecosystem and democratising a technology which is only accessible (and understood by) a very small number of people around the world.

Alongside the launch of Braket, AWS will also be launching two research centres. The first, the AWS Center for Quantum Computing, which is being established at Caltech, will focus on academic research to further the segment. The second, Amazon Quantum Solutions Lab, will focus on working with customers to make more practical solutions for industry.

Public cloud gathering momentum in India – Gartner

Few countries are speeding towards the digital economy as quickly as India, and it seems the bug is catching as enterprise organizations start to surge spending on the public cloud.

Today’s India is almost unrecognisable from bygone years. With a renewed focus on digital from Government and regulatory agencies, telcos finally spending on networks and consumers demonstrating an incredible appetite for data, India is quickly closing the divide. An increase in public cloud spending only adds further confidence in progress.

“Moving to the cloud and investing in public cloud services have become imperative to the success of digital business initiatives,” said Gartner Analyst Sid Nag.

“It’s no longer a question of ‘why’, but a matter of ‘when’ organizations can shift to the cloud. We have entered the cloud 2.0 era, where organizations are adopting a cloud-first or a cloud-only strategy.”

Those who are of a certain age will remember the excitement which was drummed up around the ‘BRIC’ nations. The acronym described the economic potential of slumbering giants (Brazil, Russia, India and China), four countries with large population that were supposed to be the growth engines for international businesses around the world after growth in domestic markets slowed.

China certainly offered fortunes for those who were strategically savvy enough, while there has been some promise in Russia and Brazil. India was always the nation which undermined the BRICs theory, though it is quickly entering its own digital era.

According to Gartner estimates, public cloud investment from enterprise organisation will increase by 25% over the next 12 months. Software-as-a-Service (SaaS) remains the largest segment, representing 42% of all investments, though this is the same journey many ‘developed’ nations took in bygone years. The team estimates SaaS cloud application services will total $1.4 billion over the next 12 months, an increase of 21%.

Segment 2018 2019 2020
Platform-as-a-Service (PaaS) 284 363 461
Software-as-a-Service (SaaS) 900 1,105 1,364
Business-Process-as-a-Service (BPaaS) 172 189 212
Cloud management and security 187 228 274
Infrastructure-as-a-Service (IaaS) 558 744 996

Figures in millions (US$)

As you can see from the figures above, spending has been steadily increasing year-on-year, though considering the size of India as a country, the potential is significant. However, there might be a challenge on the horizon unless all the cogs click into place.

CIOs across the market are suggesting there could be consolidation in the market as smaller players are replaced by the global power houses of the cloud economy, however with such potential money will have to be spent to ensure the digital infrastructure is in place.

This is where India has traditionally struggled. It was a ‘chicken and egg’ situation, with low ROI discouraging infrastructure investment, though inadequate infrastructure seemed to hobble potential profits. This conundrum does seem to be in the past, though there is still plenty of work to do to increase the data centre footprint, as well as ‘fibering up’ the nation to take advantage of future applications, both consumer and enterprise.

Amazon Web Services announced in May it would open a new Availability Zone in the AWS Asia Pacific (Mumbai) region due to customer demand, Microsoft Azure currently has three Availability Zones in the country and has partnered with Reliance Jio to boost its presence, Google is currently hiring very aggressively in the country, while IBM recently said it was focusing more acutely on SMEs to gain traction.

India still does not compete with the top nations around the world when it comes to digital readiness, but all the pieces do seem to be falling into place. Increased investments in public cloud services and infrastructure is more evidence this country is flying towards the digital economy.

Amazon taunts Oracle over database switch

Amazon’s consumer division has completed the switch of its databases from Oracle to AWS, which took to opportunity to publicly gloat.

In a blog post Chief Evangelist for AWS Jeff Barr did his job and banged on about how great AWS is. The pretext was the completion of the lengthy process of migrating the databases of Amazon’s massive consumer division from Oracle to AWS. According to Barr it has resulted in a 60% reduction in the costs of running Amazon’s databases. He also said other customers have reported a 90% saving, which makes you wonder what Amazon is doing wrong.

“Over the years we realized that we were spending too much time managing and scaling thousands of legacy Oracle databases,” evangelised Barr. “Instead of focusing on high-value differentiated work, our database administrators spent a lot of time simply keeping the lights on while transaction rates climbed and the overall amount of stored data mounted. This included time spent dealing with complex & inefficient hardware provisioning, license management, and many other issues that are now best handled by modern, managed database services.”

What a nightmare eh? Thankfully the migration of 75 petabytes of data went without a hitch, according to Barr, which must be true because he definitely would have evangelised about the problems if there had been any. In case there was any remaining doubt about how rubbish Oracle is compared to AWS he provided this handy graphic.

aws oracle

While we wouldn’t suggest for one second that an Amazon evangelist might in any way favour Amazon, it’s hard to gauge the significance of this moment. Under normal circumstances the loss of one of the biggest companies in the world would have been fairly disastrous news for Oracle. But since Amazon got into the database game it was just a matter of time, so Oracle’s probably not too bothered.