Satya Nadella - CEO, Microsoft
Both Microsoft and Amazon Web Services (AWS) reported some impressive cloud revenue figures to start the year, with Microsoft boasting nearly double the year-on-year growth of its big rival and market leader.
AWS passed the US$20 billion run-rate milestone with its Q4 2017 results this week, which also boasted quarterly revenue of US$5.1 billion, up 45 per cent year-on-year.
Meanwhile, Microsoft Q2 2018 figures showed 98 per cent Azure revenue growth and 'intelligent cloud' revenue up 56 per cent year-on-year to US$5.3 billion.
This figure includes the online version of Office and the Dynamics CRM product, among other products, making it difficult to do an apples for apples comparison of AWS and Azure revenue.
Founded in 2006, AWS is solely a public cloud company and its results are reported standalone by parent company Amazon.
Microsoft - founded in 1975 - is a technology behemoth that has to break out its cloud (branded intelligent cloud) earnings. This category includes Windows Server, SQL Server, System Center, data centres and Azure.
So is Microsoft really catching AWS?
Michael Segal, area vice president strategy at monitoring software vendor Netscout seems to think so.
"Azure has a long way to go to dislodge AWS, but its gaining ground on the number one player in the cloud services market, while outperforming Google and IBM," Segal said. "Microsoft's investment in Azure has paid off thanks to more and more enterprises choosing to migrate services and applications to public cloud infrastructures."
In terms of raw figures, not growth, Azure is still a way behind. Even a generous assumption of Azure's share of that US$5.3 billion intelligent cloud revenue figure for the quarter would put it well behind the US$5.1 billion AWS racked in over a similar period.
Dave Bartoletti, a principal analyst at Forrester estimates AWS revenue at US$18 billion and Azure, excluding Office 365 and other non-platform revenue, at US$12 billion for the calendar year.
"Azure has been growing faster on a smaller base, yes, but in our view, AWS's growth is still very strong even at their size," he added. "Azure is giving AWS a run globally, and is close to feature parity on many services.
"Azure has also aggressively built out global regions and is on par with AWS for global data centre locations. It's a healthy and exciting market, and Azure's doing quite well."
What we do know is that AWS is the clear market leader, and Microsoft can boast large growth figures as they are working from a lower base.
The nature of Microsoft's financial reporting means we can't compare the two directly when it comes solely to IaaS, which is traditionally an AWS stronghold, but having double the growth figure at 98 per cent to 45 per cent at AWS would suggest there is some closing of the gap.
Microsoft CEO Satya Nadella, a cloud guy through and through, put some of this progress down to its focus on emerging technology areas like IoT and machine learning, as well as geographical wins in the UK and Germany.
On the Q2 earnings call he said: “Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth.
"So I feel very, very good about ultimately having innovation that drives both the consumption of more higher level services and then also making sure that we are available in all parts of the world, where the demand is going to spread to, because we are in the very, very early innings of essentially this new cloud growth, and there's only going to be increasing demand."
More specifically: "We clearly see things first happening in the US and quickly followed by geographies like Germany and the UK.
"There are certain workloads like the IoT workload, where we do see very advanced action in countries like Germany – especially with industrial customers in terms of smart factories."
