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Amazon Cloud Services Under Growing Threat From Microsoft, Google, IBM

X Amazon (AMZN) is in a league of its own in the cloud-computing field but is being challenged by the fast-growing operations of other cloud service providers like Microsoft (MSFT) and Google.

New data from Synergy Research Group, based on a reading of first-quarter reports, show that there are five major cloud infrastructure service providers that are growing more rapidly than Amazon Web Services, it said.

Amazon Web Services, as the market leader, remains well ahead of the field, with a global market share that is holding steady at around 33%, Synergy said. Amazon, in its first-quarter report on Thursday, showed AWS revenue of $3.66 billion, up 43% year over year. The business is also highly lucrative for Amazon. Operating income of $890 million for AWS represented the bulk of its $1 billion in operating income overall.

Microsoft, Google owner Alphabet (GOOGL), IBM (IBM), Alibaba (BABA) and Oracle (ORCL) all achieved growth rates in the first quarter "that were substantially higher than that of AWS." But AWS  is "still comfortably bigger than the other five combined," Synergy said.

It said Microsoft, Alphabet and Alibaba all achieved annual growth rates of 80% or more. Salesforce (CRM) and privately held Rackspace are the two other companies in the ranking of top cloud providers.

Microsoft, in its first-quarter report,  said its cloud-computing platform, Azure, grew 93% year over year. The company did not disclose a revenue figure.


IBD'S TAKE: Amazon hit a record high Friday, with Amazon Web Services playing a big role in why it beat estimates on the top and bottom lines.


Synergy estimates that quarterly cloud infrastructure service revenue has now reached almost $10 billion, a figure that includes infrastructure-as-a-service and platform-as-a-service as well as private cloud services. Synergy expects that to grow at more than 40% per year.

While AWS, Microsoft and Google are the lead providers in IaaS/PaaS, IBM continues to lead in hosted private cloud, where Rackspace and some traditional IT service providers feature more prominently than they do in public cloud.

Alphabet does not break out cloud revenue. It's included with its "Google other revenues" segment, which rose 49% year over year to $3.1 billion.

Alibaba, for its fiscal third quarter ended Dec. 31, said revenue from its cloud-computing unit rose 115% to $254 million. It reports fiscal fourth-quarter results on May 18.

Amazon shares rose 0.7% to 924.99, moving above a 923.82 buy point but closing well off record intraday highs of 949.59.

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