Cloud had a banner quarter despite top vendors slowing down

Due to COVID-19 lockdowns, offices around the globe were able to detether their critical applications from the office-bound infrastructure and spend more on cloud services in the second quarter.
According to separate reports by Canalys and Synergy Research Group, cloud infrastructure spending exceeded $30 billion in Q2. These reports were released after all major cloud vendors had released their earnings reports. Canalys estimated that the spending for the period was $34.6 billion. This is an increase of more than $8 billion compared to last year and the market’s “largest quarterly growth in dollars.”
Synergy projects that cloud market growth will exceed 30 percent by 2020. The slowdown is actually slower than in previous year’s, but Synergy explained that it is due to market saturation and not decreasing demand.
John Dinsdale, Synergy chief analyst, stated that public cloud is beneficial because enterprises are struggling to adapt to new norms. “The percentage growth rate is declining, as it should when a market reaches huge scale, but the incremental growth of absolute dollars remains truly impressive.”
The market share standings for the top cloud vendors are unchanged. According to both firms, Amazon Web Services (AWS), still holds the lead with about a third market share. Microsoft Azure is second, with about a fifth the overall market. Google is in third place, with less than 10% of the market.
In their most recent earnings reports, all three of the Top 3 companies reported a slowing in growth. AWS, for example, saw a 29 percent increase in year-over-year growth, which was the lowest annual increase since records began. Analysts believe this is a sign of the pandemic economy, which is forcing organizations to reduce cloud costs while using more of it.
According to Blake Murray, a Canalys analyst, top vendors must differentiate themselves to increase their customer wins during the pandemic and afterward. “As the competition for customers’ spending on digital transformation projects increases, differentiation among the top providers will be crucial.”
Murray identified security, multicloud support, code development, migration, and cloud cost management among the “key areas to focus” when choosing cloud providers.