Cloud

Amazon crushing IaaS cloud competition, Oracle gaining ground in SaaS and PaaS

AWS has more than double the market share of its next nine IaaS competitors combined. But for Oracle's cloud ambitions, it just might have a shot in PaaS and SaaS.

In the world of cloud, Amazon Web Services (AWS) continues to dominate, according to Gartner's recently released report, Market Share: Public Cloud Services, Worldwide, 2016. With over 44% of the all-important IaaS market, AWS owns more than double the market share of its next nine largest competitors combined. Given how much traction Microsoft Azure and Google Cloud seem to have made over the last year, this continued dominance is a bit surprising.

Perhaps less surprising, however, is that Oracle couldn't manage to crack the top-10 largest IaaS vendors (though it earned a more respectable 7th place and 2% market share in PaaS, with an even more robust 4th place in SaaS and 5.6% market share). Indeed, while Oracle chairman Larry Ellison may bluster that Oracle is "completely transforming the way all companies buy and use cloud by providing flexibility and choice," the reality is that Oracle is hardly transforming the way any companies buy and use cloud.

Nor is it alone in this. Of the legacy tech vendors, only Microsoft seems to be putting up strong growth and market share numbers across IaaS, PaaS, and SaaS.

AWS: Still lonely at the top

The cloudy rich keep getting richer in IaaS land, with AWS the richest of them all. AWS increased its share of the market between 2015 and 2016 from 39.7-44.1%, growing IaaS revenue by 45.9%. Microsoft, in second place, grew faster (61.1%) to finish 2016 with 7.1% of the market. Google, often considered the third member of the public cloud apocalypse, is actually fourth, with Alibaba jumping to 3% of the market in 2016.

And everyone else? Either in retreat (Rackspace) or a rounding error:

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While IBM heads the list of also-rans (growing to 1.4% of the market), no one else lands above 1%. Oracle, despite reporting solid growth in its cloud business, comes in below 0.5% market share, and where it stands is actually unknown since Gartner didn't break out data for anyone outside the top 10 (the 10th place vendor, Dimension Data, earned 0.5% market share on $120 million in revenue).

Meanwhile, in PaaS and SaaS land

In PaaS, however, Oracle roared to 167% growth on $181 million in revenue. For anyone hoping to compete with AWS, PaaS and SaaS are arguably their best bets. Ellison can talk all he wants about being 50% cheaper than AWS in IaaS, but no one is listening. In PaaS, however, he may have a chance.

Salesforce used to top the PaaS list, but in 2016 it actually saw its 15.6% share decline to 15.1%, while AWS rocketed from 13.7% to 19.8%. Companies keep buying basic IaaS services from AWS like compute and storage, but they're also increasingly turning to AWS for PaaS offerings like Amazon CloudSearch. And as more developers turn to serverless offerings like AWS Lambda, expect this shift to accelerate.

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Still, it's hopeful for Oracle that it's the only other vendor (besides AWS) to register triple-digit PaaS growth.

As for SaaS, AWS doesn't do much (yet!) in this area, so Microsoft rules the roost with 16.3% market share. Oracle, however, is coming up fast, registering twice as much growth as any other SaaS vendor, landing at 5.6% market share.

Going forward, it's likely that AWS will continue to cement its lead in IaaS, extend its lead in PaaS, and create a base in SaaS. Microsoft, for its part, will play across all three and continue to establish itself as a credible (long-term) contender to AWS' overall cloud leadership.

But it's Oracle in PaaS and SaaS that shows the most promise for disrupting itself. We're likely never going to see it make a meaningful mark in IaaS, whatever Ellison's mainstage delusions. But in PaaS and SaaS, Oracle has plenty of runway and committed customers to help pay for the transformation. Time for AWS to worry? No. But for every other vendor, which collectively lost market share against the top vendors in each cloud category in 2016, the hour may be too late to mount any resistance.

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Image: iStockphoto/Kalawin

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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