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AWS Cloud Services: Adding thunder to cloud computing industry

March 2019

Read Time: 4 minutes

Technology industry is growing faster than global GDP with tech firms leading the list of most highly-valued companies in financial markets across the world. Cloud computing is one of the secular macroeconomic trends driving this USD 3.8 trillion industry. 


It is projected that 25%-35% of IT spend have transitioned to the cloud and the market is predicted to increase to USD 390 billion in 2020 from USD 180 billion in 2015 (growing at a CAGR of 17%). 


Leading this space is Amazon Web Services (AWS) – a visionary pioneer in the cloud computing services which established itself as early as 2006. After focusing majorly on the Infrastructure-as-a-Services (IaaS) segment, AWS has been moving from strength to strength across other business models such as Platform-as-a-Service (PaaS) and Data-as-a-Service (DaaS). 


This report offers insights into AWS - its offerings, benefits (compared to traditional on-premise infrastructure), partner ecosystem and deal activity.


AWS Highlights


Trusted by the biggest brands, AWS is the fastest enterprise IT vendor to hit the USD 10 billion run-rate and has annually launched over 1000 features. It has grown at the rate of 50% with a promising forecast revenue of USD 25.3 billion in CY18E (USD 17.5 billion in CY17), and approximately USD 6.4 billion in the operating income. AWS offers a vast range of cloud-based products which include storage, compute services, etc. among several others. Along with its consulting and technology partner programs, its widely used services include Amazon Route 53, Amazon EC2, Amazon S3, etc. among others. 


AWS Competitor Landscape


Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) are the three segments of the cloud market. AWS dominates the fastest growing, IaaS cloud market (USD 41 billion for CY18) with a CAGR of 29% followed by Microsoft, Azure, IBM, Google Cloud, Alibaba and SAP. Despite being the smallest market, PaaS has scaled revenue-wise. Salesforce leads the PaaS segment (USD 15 billion for CY18) which is growing at a rate of 23%, followed closely by AWS, Oracle, SAP and Microsoft. 


However, the SaaS product category segment (USD 74 billion for CY18) remains highly fragmented, with thousands of vendors vying for its potential. The major players include Salesforce, Microsoft, Oracle, SAP, Adobe, Workday, Google and IBM. Amazon currently doesn’t have a stronghold here, though it is gradually growing its presence. In the overall competitor landscape, AWS, Microsoft and IBM remain the major players with $10 billion+ revenue from the cloud.


 AWS Partner Landscape


The AWS Partner Programs comprise of consulting (48%) and technology (52%) partners. The vertical landscape is defined by 60% of the partners from the software and internet industry, 15% from the business and consumer services, and 5% each from the government, financial services, telecommunication, with the remaining from other industries. In the geographical landscape, 75% are from the US, 7% from the UK, 5% from Canada and the rest from other countries. There are about 75 AWS Premier Consulting partners of which pure-play AWS service providers include Megazone, 2nd Watch, Logicworks, etc. among others. Premier multi-platform service partners include TCS, Accenture, Capgemini, Cognizant, HCL, etc., among the rest.


Deal Activity 


There is tremendous awareness of the impact that cloud technologies have on businesses. Over 30 deals have been converted in the past 24 months which indicates that the AWS deals are gaining traction. Due to the recurring nature of the business, the multiples range around 4-6 times the net revenue which is higher than what Salesforce/Workday partners have experienced. 


While the cloud computing landscape undergoes rapid revolution, the top cloud providers such as Amazon will continue making big strides. As per Avendus’s research, the cloud computing market race in 2019 will drive and double IT spends over time and the “as-a-service” models will continue to power enterprises with scalable, reliable, and low-cost infrastructure platforms. 


AWS Cloud Services – a report by Avendus Capital


AWS Cloud Services – a report by Enterprise Technology and Services, Avendus Capital 

Author: Amit Singh, Executive Director, Co-head, Enterprise Technology and Services, Avendus Capital

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