It’s that time of year again to review the commentary from the big three (at some point I should probably include Alibaba) in the cloud world. The reason I pay attention to them is it shows their priorities, how they’re planning on differentiating, and also broad trends within enterprise software.
First up, my friend Jamin had this great tweet showing the current scale and mind-boggling future scale of the cloud businesses when accounting for their growth rates off huge bases.
With that let’s dive into some of my high level takeaways after reading the quarterly commentary (really their narratives that they want the street, competitors, customers, and employees to focus on).
One big trend especially at AWS and Azure seems to be more longer term contracts. Likely, because of covid, the shift to cloud and digital transformation has caused many enterprises to fully commit to cloud and leverage long term contracts to get cheaper annual rates on cloud resources.
AWS: We do see good trends with new contracts and new clients that are either signing up with AWS and making the journey to the cloud or accelerating their journey to the cloud or setting up new longer-term contracts with us…there's new contracts signed with large players for multiple years. So there's pricing pressure.
Azure: In our Commercial business, healthy demand for our differentiated hybrid and cloud offerings as well as increased long-term commitments to our platform drove significant growth in the number of $10 million-plus Azure and Microsoft 365 contracts.
Regulatory changes are here to stay and causing the cloud providers to rapidly step up their pace of adding new regions. Data sovereignty caused by GDPR, CCPA, and other regulations are driving this trend. The side benefit is decreased latency and better personalization ability for companies serving customers in a certain geo.
AWS: There's also the expansion of the sales force and building infrastructure to add new regions globally. So as we said, these margins are going to bounce around….adding 7 new regions
GCP: As an example, we most recently announced a second cloud region in India. This is our 26th cloud data center region globally
Azure: If you think about the approach we took to our data center architecture, the fact that we have more regions, is to meet, I would say, both the real-world needs for the computing architecture side but also the regulatory and data residency requirements. So we feel we picked the right approach, and that's paying dividends today just even in terms of our geographic coverage, our coverage of all of the regulatory requirements.
The clouds all talk about differentiation…well, almost all of them. AWS doesn’t talk about much besides the fact that they have a lot of scale and services. GCP as always talks about data and AI but is increasingly talking about security and zero-trust architectures (leverage BeyondCorp mindshare. Azure is still mainly focused on hybrid architectures with data as well.
AWS: Customers recognize that the move to the cloud is very positive for their businesses in the medium and long term. Disruptive economic events like COVID have caused many people to step back and think about how they want to change strategically, and many have come to the conclusion that they do not want to own and run their own data centers. They see that they can save money and gain agility and innovation by moving to AWS.
GCP: First, the increase in cyber and ransomware attacks is a wake-up call for the industry. Over 2 decades, Google has built some of the most secure computing systems in the world…We pioneered the Zero Trust approach, an architecture that builds in multiple layers of defense against unauthorized access. Second, our expertise in real-time data and analytics continues to differentiate us in the data cloud, one of the fastest-growing segments of the market. BigQuery is not only a data warehouse, it's a platform for customer innovation
Azure: We're also expanding our opportunity in hybrid. Today, over 75% of the Fortune 500 use our hybrid offerings. Azure Arc extends the Azure control plane across on-premise, multi-cloud and the edge…As the digital and physical worlds converge, we are leading in a new layer of the infrastructure stack, the enterprise metaverse…Data is the most strategic asset for every business. We're the only cloud provider that helps organizations build sovereignty over their data by bringing together hyperscale, OLTP, analytics and governance workloads. Cosmos DB has become the go-to database, powering the world's most demanding mission-critical workloads.
My big takeaway from all of this? Maybe' we’ve taken this metaverse thing a bit too far if we’re going to now start talking about “the enterprise metaverse”.
These businesses are bonkers.