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Microsoft continues to beat Amazon in cloud infrastructure market, despite growth slowdown

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As businesses sought to reduce spending in an unsteady economy, it was a challenging quarter for the cloud infrastructure sector. The growth of the market slowed to 21%, a sharp decline from the 36% increase which was experienced the previous year when taking into account together with a strong dollar and a weak Chinese market.

Though we aren’t experiencing the flashy growth of previous years, Synergy Research nonetheless discovered that the market exceeded $61 billion for the quarter and had revenues of over $212 billion over the previous 12 months, a large figure by any standard, despite the slowdown. It should be noted that despite the fact that growth for each of The Big Three slowed in Q4 2022 compared to the previous quarter, Microsoft still managed to overtake Amazon in market share. Microsoft’s market share rose to 23% from 21% in the previous quarter, while Amazon’s share dropped from 34% to 33% and Google’s share stayed the same at 11%. 66% of global cloud revenue was generated by the Big Three cloud service providers.

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Amazon was the first to market and has a significant lead.

For Amazon, Microsoft, and Google, that equals roughly $20 billion, $14 billion, and $7 billion, respectively. As usual, IaaS, PaaS, and hosted private cloud services are being examined. SaaS, which is measured individually, is not included. Amazon cloud revenue increased by a modest 20% over the prior year, and the company admitted during the results call that growth fell even more to the mid-teens in the first month of the year. Microsoft’s cloud growth was down to 22% from 24% in the previous quarter, and Google Cloud revenue was up to 32% from 38% in the prior quarter.

As the market slows after years of consistent expansion, it appears that Amazon’s main rival, Microsoft, is getting a small window of opportunity to catch up to them. Amazon was the first to market and has a significant lead. It might have something to do, at least in part, with the market maturity that Amazon is finally catching up to. It will be interesting to observe the market in 2023 to see how the general economic climate affects revenue and whether Amazon’s rivals continue to gain ground as a result of the slower growth we’ve been experiencing. In spite of general investment dropping, Microsoft is still able to gain some edge.

 

In spite of general investment dropping, Microsoft is still able to gain some edge.

Three main factors, all of which head analyst at Synergy John Dinsdale believes are short-term problems, account for this quarter’s decline, according to Dinsdale, who is upbeat about the future. Three primary elements are present. The apparent growth rate of many non-US markets is reduced by the stronger US dollar; the sizeable Chinese market is still restrained by local regulations and pandemic concerns; and the worsening economic situation has led some businesses to carefully examine their cloud service investment. The chief analyst stated in a statement that Synergy expects growth rates to continue robust over the coming years and that these variables should mostly be of a short-term character.

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