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Will Azure top AWS? Take a deep dive into the Azure Cloud Services ecosystem with Avendus’ latest report

February 2020

Read Time: 5 minutes

Global businesses and organizations are continuing to invest in their technological evolution at an ever increasing rate. The global scale of IT spending is expected to cross USD 3.9 trillion in 2020 with a sizable share of this growth coming from cloud technology. In fact, the global shift towards a cloud-based environment is projected to grow the industry at a CAGR of 22.78% to reach USD 1.13 trillion by 2023. 

A major reason for this has been the push by IT decision makers to adopt a multi-cloud strategy for greater business agility and operational synergy. As a result, the competition between cloud vendors has never been more intense, with Microsoft Azure and Amazon’s AWS emerging as the leading contenders. 

There is little doubt that Azure is giving AWS a run for its money and the state of the global cloud vendor market is undergoing a transformation. This report offers analysis-based insights into Azure’s offerings, advantages, partnerships, and deal activity to determine the future of the cloud vendor landscape going forward.     


Cloud Landscape Overview - Azure vs. AWS 

AWS has long since benefited thanks to its first mover advantage but Azure has rapidly caught up in recent years. Recently, Azure has snatched major deals away from AWS, in particular, the USD 10 billion contract for the US Defense Department’s Joint Enterprise Defense Infrastructure project and the USD 2 billion infrastructure deal with AT&T.

Our research shows that the Azure is poised to become the single largest contributor in Microsoft’s portfolio as it already holds a 33% revenue share for Q1 FY20. This is also supported by the fact that about 80% of typical deal size for an Azure services player comprised of migration, modernization, and managed services, raked in a 40-50% margin range. 

And while AWS holds a clear majority in the cloud market share, Azure is making strides with each passing year. This is especially thanks to their strong technological and ecosystem differentiators. For instance, Azure has developed an expertise in offering hybrid cloud capabilities, high standards of compliance and security certifications, developer friendly platform, and become a pioneer in edge computing. 

Clash of the Clouds

There’s no mistaking AWS’s position as a technological innovator. The Amazon brand has reaped the head-start to develop key technological advantages. The company offers best in class on-time performance across all vendors, offering them a plethora of reduced downtime, services, and functionalities, while also offering extensive documentation for developers. Moreover, AWS is more suited to open open-source development environment given its LINUX based foundations.

Despite, these key advantages, AWS is still missing some key ingredients. Azure, as a part of the Microsoft brand, enjoys the benefit of the company’s near 45-years’ of experience serving enterprises. The most obvious being the value of the Microsoft brand itself and its long-lasting relationships with about 95% of the Fortune 500 companies, 33% of whom earn more than USD 200 million in revenues. In contrast, only 5% of AWS’ clients can claim the same.

In addition, the Azure platform also offers other key features such as its lower costs, easy integration on IaaS, PaaS & SaaS domains, and a seamless relationship with the overall Microsoft ecosystem such as Office 365 and Windows. 

Azure - Vendor landscape 

In terms of Azure’s vendor networks, Microsoft already has over 68,000 partners worldwide but it’s worth noting that only 50 would be Azure Expert MSPs. In reality, there are very few pure-play Azure Expert MSPs, but those on the list include companies such as 10th Magnitude, Cloud Direct, Sela, 3Cloud, New Signature, Green House Data, and Coretek. The common denominator among most of them is that they have Microsoft Dynamics & Office 365 as a significant portion of their business. The multi-cloud Azure Expert MSPs also include top IT services companies like TCS, DXC, Wipro, Accenture, Capgemini, Cognizant, and HCL; along with the smaller cloud players such as Bespin Global, Logicworks, Cloudreach, Smartronix, Sentia, and Claranet.  

Azure - Deal Activity

The flurry of activity within the cloud industry is indicative of its value to business. Within the Microsoft ecosystem, there have been over 85 M&A deals closed between 2015 and Q3’ 2019. These deals include key strategic buyers such as CGI, DXC, Greenhouse Data, Sentia, Cloudreach, HP, CloudDirect, and Kaseya – all of whom are major players in their field. And some of the investors who’ve shown great activity in this space include the likes of Thomson Street Capital Partners, Blackstone, Singapore Technologies Telemedia and Pamplona Capital, among others.

However, Azure continues to lag behind AWS when it comes to overall value and volume. This is mainly due to the aforementioned limitation of pure-play Azure vendors. In fact, given the momentum towards a multi-cloud strategy, several AWS specialists have gone on to acquire Azure capabilities. But as we proceed onwards, there are more than enough indications that investors remain keen on Azure.

To know more about our final verdict on the Azure vs. AWS race and to get the latest insights on Microsoft’s Azure market activity download the full report here: Will Azure top AWS? A Deep-dive into Azure Services Ecosystem – a report by Enterprise Technology and Services, Avendus Capital 

Author: Will Azure top AWS? A Deep-dive into Azure Services Ecosystem – a report by Enterprise Technology and Services, Avendus Capital

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