The following ten charts will change your perspective of Microsoft Azure’s growth:
Intelligent Cloud delivered the highest operating income of all segments in the 2nd quarter at $6.4 billion or 36% of total consolidated operating income. This quarter, Microsoft’s success with indirect channel sales combined with more enterprise customers accelerating their cloud-first initiatives contributed to Intelligent Cloud leading all segments in operating income. The following is from the Q2, FY21 Earnings Call.
Synergy Research Group’s latest cloud market analysis finds that Amazon and Microsoft are over 50% of the global cloud provider market, with Microsoft reaching 20% worldwide market share for the first time. Q4, 2020 enterprise spending on cloud infrastructure services was just over $37 billion, $4 billion higher than the previous quarter and up 35% from the fourth quarter of 2019. Synergy Research notes that it has taken just nine quarters for the market to double in size.
63% of enterprises are currently running apps on Microsoft Azure, second only to AWS. Azure is narrowing the gap with AWS in both the percentage of enterprises using it and the number of virtual machines (VMs) enterprises are running on it. 6% of enterprises are spending at least $1.2 million annually on Microsoft Azure. Source: Statista and Flexera 2020 State of the Cloud Report, page 50.
2020 total cloud infrastructure services spending grew 33% to $142 billion from $107 billion in 2019, according to Canalys, with Microsoft’s indirect channel business fueling their 20% market share growth. Microsoft’s dominance of indirect selling channels is evident in the level of sales enablement, sales and technical support they provide resellers. Canalys’ Chief Analyst Alastair Edwards says that “organizations are turning to trusted business partners to advise, implement, support and manage their cloud journeys and articulate the real business value of cloud migration.”
19% of enterprises expect to invest significantly more on Microsoft Azure in 2021, leading all other cloud vendors this year. Microsoft Azure leads all vendors when compared to the percentage change in spending this year. It’s noteworthy that 61% of all enterprises interviewed expect to increase their investments in Microsoft Azure this year, second only to Microsoft SaaS software. Source: 2021 Flexera State of Tech Report, January 2021.
Microsoft Azure Stack is the second most-used private cloud platform by enterprises, with 35% of them currently running apps today. Azure Stack also leads all others in experimentation, with one in five enterprises, or 21%, currently in that phase of deployment. 67% of all enterprises interviewed in the 2020 Flexera State of the Cloud Report are either running Azure apps or are considering it.
Microsoft’s centerpiece for their intelligence investment is the Microsoft Intelligent Security Graph, which processes over 630 billion authentications across our cloud services each month. Microsoft relies on the Security Graph to gain insights into normal behavior, including sign-ins and authentications and abnormal behavior, including attempted bypasses to two-factor authentication. Microsoft blocks more than 5 billion distinct malware threats per month, providing a great deal of useful data to analyze endpoints across customers’ networks. Source: Microsoft CISO Workshop 1 – Cybersecurity Briefing.
44.5% of enterprises say Microsoft Azure is their preferred provider for Cloud Business Intelligence (BI). Azure is considered 27% more critical to an enterprises’ Cloud BI requirements and preferences than Amazon Web Services. It’s noteworthy that 96.5% of all enterprises have a preference for Microsoft Azure BI versus its main competitors, including Google Cloud, IBM BlueMix, or Alibaba.
Microsoft Azure is the leading IoT platform worldwide by end-to-end capabilities with a total score of 276 according to Counterpoint Research. According to the methodology Counterpoint used for ranking IoT platforms, Microsoft Azure is considered a global leader in edge data processing, an increasingly important feature of IoT platforms worldwide. The ability to deliver IoT capabilities from the cloud to the edge helped Microsoft’s platform rank high in this category. Source; Statista and CounterPointResearch.com.
Microsoft Azure is the foundation for a Digital Supply Chain Platform that integrates supply chain partner, corporate, data & advanced analytics platforms and supply chain core transaction systems. The ongoing pandemic is putting continued pressure on supply chains. Most manufacturing executives say that employee safety, data security, remote worker access, supply chain visibility and insights visibility are high priorities. In response to these market needs, Microsoft Supply Chain (MSC) was created on the Azure platform. The diagram below explains how Azure is integral to the Digital Supply Chain platform.
As of Q2, 2016 Microsoft Azure has achieved 100% year-over-year revenue growth and now has the 2nd largest market share of the Cloud Infrastructure Services market according to Synergy Research.
Microsoft’s FY16 Q4 earnings show that Azure attained 102% revenue growth in the latest fiscal year and computing usage more than doubling year-over-year.
451 Research predicts critical enterprise workload categories including data, analytics, and business applications will more than double from 7% to 16% for data workloads and 4% to 9% for business applications.
Cloud-first workload deployments in enterprises are becoming more common with 38% of respondents to a recent 451Research survey stating their enterprises are prioritizing cloud over on-premise.
451 Research’s latest study of cloud computing adoption in the enterprise, The Voice of the Enterprise: Cloud Transformation – Workloads and Key Projects provides insights into how enterprises are changing their adoption of public, private and hybrid cloud for specific workloads and applications. The research was conducted in May and June 2016 with more than 1,200 IT professionals worldwide. The study illustrates how quickly enterprises are adopting cloud-first deployment strategies to accelerate time-to-market of new apps while reducing IT costs and launch new business models that are by nature cloud-intensive. Add to this the need all enterprises have to forecast and track cloud usage, costs and virtual machine (VM) usage and value, and it becomes clear why Amazon Web Services (AWS) and Microsoft Azure are now leaders in the enterprise. The following graphic from Synergy Research Group’s latest study of the Cloud Infrastructure Services provides a comparison of AWS, Microsoft Azure, IBM, Google, and others.
Seven Ways Microsoft Is Redefining Azure For The Enterprise
Being able to innovate faster by building, deploying and managing applications globally on a single cloud platform is what many enterprises are after today. And with over 100 potential apps on their cloud roadmaps, development teams are evaluating cloud platforms based on their potential contributions to new app development and business models first.
AWS and Microsoft Azure haven proven their ability to support new app development and deployment and are the two most-evaluated cloud platforms with dev teams I’ve talked with today. Of the two, Microsoft Azure is gaining momentum in the enterprise.
Here are the seven ways Microsoft is making this happen:
Re-orienting Microsoft Azure Cloud Services strategies so enterprise accounts can be collaborators in new app creation. Only Microsoft is coming at selling Cloud Services in the enterprise from the standpoint of how they can help do what senior management teams at their customers want most, which is make their app roadmap a reality. AWS is excellent at ISV and developer support, setting a standard in this area.
Giving enterprises the option of using existing relational SQL databases, noSQL data stores, and analytics services when building new cloud apps. All four dominant cloud platforms (AWS, Azure, Google, and IBM) support architectures, frameworks, tools and programming languages that enable varying levels of compatibility with databases, data stores, and analytics. Enterprises that have a significant amount of their legacy app inventory in .NET are choosing Azure for cloud app development. Microsoft’s support for Node.js, PHP, Python and other development languages is at parity with other cloud platforms. Why Microsoft Azure is winning in this area is the designed-in support for legacy Microsoft architectures that enterprises standardized their IT infrastructure on years before. Microsoft is selling a migration strategy here and is providing the APIs, web services, and programming tools to enable enterprises to deliver cloud app roadmaps faster as a result. Like AWS, Microsoft also has created a global development community that is developing and launching apps specifically aimed at enterprise cloud migration. Due to all of these factors, both AWS and Microsoft are often considered more open cloud platforms by enterprises than others. In contrast, Salesforce platforms are becoming viewed as proprietary, charging premium prices at renewal time. An example of this strategy is the extra 20% Salesforce charges for Lightning experience at renewal time according to Gartner in their recent report, Salesforce Lightning Sales Cloud and Service Cloud Unilaterally Replaced Older Editions; Negotiate Now to Avoid Price Increases and Shelfware Published 31 May 2016, written by analysts Jo Liversidge, Adnan Zijadic.
Simplifying cloud usage monitoring, consolidated views of cloud fees and costs including cost predictions and working with enterprises to create greater cloud standardization and automation. AWS’ extensive partner community has solutions that address each of these areas, and AWS’ roadmap reflects this is a core focus of current and future development. The AWS platform has standardization and automation as design objectives for the platform. Enterprises evaluating Azure are running pilots to test the Azure Usage API, which allows subscribing services to pull usage data. This API supports reporting to the hourly level, resource metadata information, and supports Showback and Chargeback models. Azure deployments in production and pilots I’ve seen are using the API to build web services and dashboards to measure and predict usage and costs.
Openly addressing Total Cost of Ownership (TCO) concerns and providing APIs and Web services to avoid vendor lock-in. The question of data independence and TCO dominates sustainability and expansion of all cloud decisions. From the CIOs, CFOs and design teams I’ve spoken with, Microsoft and Amazon are providing enterprises assistance in defining long-term cost models and are willing to pass along the savings from economies of scale achieved on their platforms. Microsoft Azure is also accelerating in the enterprise due to the pervasive adoption of the many cloud-based subscriptions of Office365, which enables enterprises to begin moving their workloads to the cloud.
Having customer, channel, and services all on a single, unified global platform to gain greater insights into customers and deliver new apps faster. Without exception, every enterprise I’ve spoken with regarding their cloud platform strategy has multichannel and omnichannel apps on their roadmap. Streamlining and simplifying the customer experience and providing them with real-time responsiveness drive the use cases of the new apps under development today. Salesforce has been successful using their platform to replace legacy CRM systems and build the largest community of CRM and sell-side partners globally today.
Enabling enterprise cloud platforms and apps to globally scale. Nearly every enterprise looking at cloud initiatives today needs a global strategy and scale. From a leading telecom provider based in Russia looking to scale throughout Asia to financial services firms in London looking to address Brexit issues, each of these firms’ cloud apps roadmaps is based on global scalability and regional requirements. Microsoft has 108 data centers globally, and AWS operates 35 Availability Zones within 13 geographic Regions around the world, with 9 more Availability Zones and 4 more Regions coming online throughout the next year. To expand globally, Salesforce chose AWS as their preferred cloud infrastructure provider. Salesforce is not putting their IOT and earlier Heroku apps on Amazon. Salesforces’ decision to standardize on AWS for global expansion and Microsoft’s globally distributed data centers show that these two platforms have achieved global scale.
Enterprises are demanding more control over their security infrastructure, network, data protection, identity and access control strategies, and are looking for cloud platforms that provide that flexibility. Designing, deploying and maintaining enterprise cloud security models is one of the most challenging aspects of standardizing on a cloud platform. AWS, Azure, Google and IBM all are prioritizing research and development (R&D) spending in this area. Of the enterprises I’ve spoken with, there is an urgent need for being able to securely connect virtual machines (VMs) within a cloud instance to on-premise data centers. AWS, Azure, Google, and IBM can all protect VMs and their network traffic from on-premise to cloud locations. AWS and Azure are competitive to the other two cloud platforms in this area and have enterprises running millions of VMs concurrently in this configuration and often use that as a proof point to new customers evaluating their platforms.
Bottom line: Amazon AWS and Microsoft Azure are the first cloud platforms proving they can scale globally to support enterprises’ vision of world-class cloud app portfolio development.
What made this webinar unique and worth mentioning is the framework that was presented for evaluating vendors. Beginning with the well-known Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) structure, Gartner added in a Business and Information Systems layer that includes brokerages, management and security. This is the layer where Gartner says they are seeing enterprise clients most concentrate on emerging technologies.
The cloud vendor landscape is defined by Cloud Services, Professional Services for Consumption, Enabling Technologies and Professional Services for building and running applications. Green designates a vendor area of emphasis, yellow are those areas serviced by partners and white areas are not addressed by the vendor’s strategy at all.
Using this framework, nine different companies were analyzed including Amazon, Google, HP, IBM, Microsoft, Oracle, Salesforce.com, SAP and VMWare.
Microsoft has the most ambitious cloud strategy of the nine companies profiled, and their cloud-first design initiative shows they have faith in Azure performing in the enterprise. Microsoft Dynamics AX 2012 will first be released on Azure, then on-premise is a case in point. Microsoft is impatient to move into a subscription model with its evolving cloud platform. Gartner’s analysis of Microsoft’s cloud strategy is shown in the following graphic.
Oracle is one of the most persistent cloud washers according to Gartner, often bending the definition of cloud computing to align with their strengths. Their continual efforts to redefine the cloud are also designed to get their formidable customer base to upgrade to the latest generation of their applications. Of the vendors compared they also have the greatest strength in enabling technologies, evidenced by their Exalogic and Exadata systems, Oracle Linux and Solaris operating systems.
SAP’s cloud strategy looks to make the most of the large, highly profitable R/3 installed base while partnering with IaaS vendors to build out their cloud platform according to Gartner. The point was made that of the vendors in the comparison, SAP prioritizes enabling technologies over owning the entire cloud stack as Oracle aspires to.
Bottom line: If you want to know the truth about a given cloud vendor evaluate their Cloud Services, Professional Services track record and how well they transform enabling technologies into successful products. The following graphic provides a summary of the vendors included in the webinar:
Calling the hype around cloud computing “deafening”, Gartner released their annual hype cycle for the 34 different technologies in a 75 page analysis today. You can find the Hype Cycle at the end of this post and I’ve provided several of the take-aways below:
The industry is just beyond the Peak of Inflated Expectations, and headed for the Trough of Disillusionment. The further up the Technology Trigger and Peak of Inflated Expectations curve, the greater the chaotic nature of how technologies are being positioned with widespread confusion throughout markets. The team of analysts who wrote this at Gartner share that conclusion across the many segments of the Hype Cycle.
Gartner states that nearly every vendor who briefs them has a cloud computing strategy yet few have shown how their strategies are cloud-centric. Cloudwashing on the part of vendors across all 34 technology areas is accelerating the entire industry into the trough of disillusionment. The report cites the Amazon Web Services outage in April, 2011 as a turning point on the hype cycle for example.
Gartner predicts that the most transformational technologies included in the Hype Cycle will be the following: virtualization within two years; Big Data, Cloud Advertising, Cloud Computing, Platform-as-a-Service (PaaS), and Public Cloud computing between two and five years; and Community Cloud, DevOps, Hybrid Cloud Computing and Real-time Infrastructure in five to ten years.
There continues to be much confusion with clients relative to hybrid computing. Gartner’s definition is as follows ”Hybrid cloud computing refers to the combination of external public cloud computing services and internal resources (either a private cloud or traditional infrastructure, operations and applications) in a coordinated fashion to assemble a particular solution”. They provide examples of joint security and management, workload/service placement and runtime optimization, and others to further illustrate the complex nature of hybrid computing.
Big Data is also an area of heavy client inquiry activity that Gartner interprets as massive hype in the market. They are predicting that Big Data will reach the apex of the Peak of Inflated Expectations by 2012. Due to the massive amount of hype surrounding this technology, they predict it will be in the Trough of Disillusionment eventually, as enterprises struggle to get the results they expect.
By 2015, those companies who have adopted Big Data and extreme information management (their term for this area) will begin to outperform their unprepared competitors by 20% in every available financial metric. Early use cases of Big Data are delivering measurable results and strong ROI. The Hype Cycle did not provide any ROI figures however, which would have been interesting to see.
PaaS is one of the most highly hyped terms Gartner encounters on client calls, one of the most misunderstood as well, leading to a chaotic market. Gartner does not expect comprehensive PaaS offerings to be part of the mainstream market until 2015. The point is made that there is much confusion in the market over just what PaaS is and its role in the infrastructure stack.
SaaS performs best for relatively simple tasks in IT-constrained organizations. Gartner warns that the initial two years may be low cost for any SaaS-based application, yet could over time be even more expensive than on-premise software.
Gartner estimates there are at least 3M Sales Force Automation SaaS users globally today.
Bottom line: The greater the hype, the more the analyst inquiries, and the faster a given technology ascends to the Peak of Inflated Expectations. After reading this analysis it becomes clear that vendors who strive to be accurate, precise, real and relevant are winning deals right now and transcending the hype cycle to close sales. They may not being getting a lot of attention, but they are selling more because enterprises clearly understand their value.
From conservative, single digit adoption rates to hockey-stick projections of exceptional growth, analyst firms, venture capitalists and government ministries are weighing in on how they see cloud adoption progressing.
While each of the adoption rate predictions vary significantly in terms of their methodologies and results, all rely on the assumption that SaaS applications including CRM will continue to gain momentum. The user adoption rates vary on how fast the momentum is, yet all share this assumption. Speed, increased user adoption rates, and the ability to more closely align software to business goals are cited most often as the biggest benefits.
Where the projections vary most is whether enterprises will eventually migrate the majority of their applications to the cloud or not. Forrester, Gartner and others see a hybrid cloud architecture emerging in the enterprise and forcing the issue of legacy systems migration by 2015. As would be expected, vendor-driven research sees an “all or nothing” world in the near future.
Wanting to see how reliable the figures were showing rapid cloud adoption in the enterprise, I did a quick sanity check. Taking the distribution of sales by segment for Salesforce.com and their annual revenue growth rate, then normalizing it across all segments, enterprise emerges as their strongest segment by a wide margin in 2015. It had a 15%+ compound annual growth rate (CAGR) from 2011 – 2015 just taking their current sales by segment distribution of sales and extrapolating forward. Data points like this and the market factors behind them is why SaaS is often used in these studies as a leading indicator of broader cloud adoption.
Forrester found that SaaS will outgrow all other cloud services, achieving 37% adoption in 2011 growing to 50% by 2012. In previous studies Forrester has shown that SaaS is a major growth catalyst of ongoing investment in IaaS and PaaS in enterprises. Source: Source: Forrsights: The Software Market In Transformation, 2011 And Beyond Shifting Buying Preferences Lead To New Software Priorities by Holger Kisker, Ph.D. with Pascal Matzke, Stefan Ried, Ph.D., Miroslaw Lisserman Link: http://bit.ly/ijJy70 The following table is from the report:
Microsoft Global SMB Cloud Adoption Study released in March, 2011 is one of the most comprehensive done this year on this topic. Of the many findings, the study predicts 39 % of SMBs expect to be paying for one or more cloud services within three years). One of the best studies on cloud adoptions done this year Source: Study Results Document (PDF (22 pages): http://bit.ly/gN8yTx
North Bridge Venture Partners, GigaOM PRO and over a dozen research partners completed the study The Future of Cloud Computing 2011. The study found 13% expressed high level of confidence in cloud computing for enterprise applications, with 40% experimenting and 10% saying they will never use cloud-based platforms as they are too risky. A presentation of the results can be found here:
Springboard Research (Forrester) completed a study of cloud computing adoption in Asia finding 31% of companies with 50 or fewer PCs will adopt cloud-based applications in 18 months, 56% with up to 500 PCs. The key findings are available for download from the source URL below the infographic.
TechTarget published their analysis of virtualization and cloud computing adoption in the study, State of virtualization and cloud computing: 2011. Of the many findings, a few of the most significant is how pervasive VMware ESXi 4 and later (vSphere) is throughout enterprises today. The study also shows that 7% of those interviewed had implemented cloud computing in 2010, growing to 9% in 2011 – quite conservative compared to many of the other adoption rate analyses completed. You can find the results here: http://searchdatacenter.techtarget.com/feature/State-of-virtualization-and-cloud-computing-2011
Yankee Group has found that in 2011, 41 percent of very large enterprises (more than 10,000 employees) have already deployed or are considering deployment of platform as a service (PaaS) within the next 12 months, compared to just 32 percent in 2010. They have also found that mobility is most significant factor driving cloud adoption in the enterprise. Source: http://professional.wsj.com/article/TPCHWKNW0020110722e77q0004d.html
Mark Russinovich, Technical Fellow on the Windows Azure team, explains how Azure continues to be developed as an OS for the data center including support for shared compute, disk and network resources and distributed application services. He also covers SQL Server integration and process management, support for queuing, structured storage and SQL storage.
The following video was recorded May 19th at the Microsoft Tech-Ed held in Atlanta, GA and runs just over an hour. It’s a great briefing on how Windows Azure is evolving to support configurable Platform-as-a-Service (PaaS) architectures. You can also download the slides from this session here Inside Windows Azure, the Cloud Operating System with no opt in from the Microsoft Channel 9 website.
Trends of search terms from user accounts and topics of their inquiries form the catalyst of research agendas in many IT advisory firms. At Gartner these two factors and others like them are commonly regarded as leading indicators of future IT spending.
Gartner has been delivering short analyses of these subject areas to clients in the form of reports, with the latest being Search Analytics Trends: Platform as a Service published on June 9, 2011. This report covers user search activity from April, 2009 to March, 2011. For purposes of the report, Platform-as-a-Service (PaaS) is defined as cloud application infrastructure services delivered as a service. Gartner makes the point that PaaS includes no traditional software license and is expensed on a metered or utility basis. Presented below is the time series of searches by month from the report.
A few key take-aways emerge from the report, and they are presented below:
Cloud Middleware Services including Platform-as-a-Service (PaaS) are still unknown to many Gartner IT user clients. As a result this area is seen with skepticism by many of their clients. In studies of PaaS adoption from other analysts at Gartner and Forrester, it is evident that internal software development will make or break the credibility of PaaS initiatives for the long-term.
When Gartner IT users search for PaaS on the website and throughout online research, the four most common secondary terms are IaaS and SaaS (7.05%), Magic Quadrant (6.12%) and cloud (5.72%). Clearly Gartner IT user clients are looking to define their own technology stack in this area and looking for a framework of reference of where PaaS fits into their own IT plans and architectures. The competitive intensity across the analyst community will most likely go up as a result of the uncertainty many IT buyers have over PaaS.
The top three vendors that Gartner IT users search for are Microsoft (18%), Amazon (13%) and Tata (11%). Additional vendors include IBM (11%), Salesforce.com (11%), SAP (7%), Google and Oracle (4%).
Bottom line: The key to PaaS adoption in larger enterprises, many of which are IT user clients of Gartner, is how successfully Independent Software Vendors (ISVs) clarify their value proposition and how their apps add value to the platform layer.
Microsoft’s cloud-based middleware platform, Azure AppFabric, is designed to streamline the development, deployment and support of applications on the Windows Azure platform. The Azure AppFabric initiative serves as the foundation of the Platform-as-a-Service (PaaS) in the Windows Azure stack as well.
Microsoft is supporting four types of multitenancy with Azure AppFabric. These types of multitenancy are explained in the presentation, with an analysis by Gartner of the multitenancy options also provided. You will find a link to the Gartner research note below.
AppService Bus Is Key To Integration in Windows Azure. The AppFabric Service Bus is an interesting integration concept Microsoft is working on right now, as its design goal is to connect systems and content outside the firewalls of companies, unifying it with internal, often legacy systems’ data. How ServiceBus will define context has not been shared by Microsoft. That however will be interesting to see, as contextual content in this type of configuration has much potential for redefining internal search.
Usability is King. Azure’s design objective for a usability standpoint is to deliver the content to any device, anywhere in the world, at any time. It is a very ambitious project and the following presentation does an excellent job of putting Azure AppFabric into context.
Mark Russinovich is a Technical Fellow working on the Windows Azure team and is considered one of the leading experts on its architecture. He is currently working on the Windows Azure Fabric Controller, which handles kernel-level tasks for the platform. He explains the functions of the Fabric Controller in detail during the following video, illustrating concepts with references to data centers and legacy Microsoft operating systems.
Windows Azure: Platform as a Service
This discussion also highlights how Windows Azure is being designed to scale for HPC-based instances and applications. At 45 minutes, this is a great overview of the latest status on Windows Azure platform development from one of the leading software architects at Microsoft. Despite how technical the discussion becomes at times, Mark Russinovich does a great job of referring back to what it means to data center requirements and simplifying complex concepts through examples.
David is a former Java Architect and in this presentation, he provides a great overview of the Azure platform, its key components. He also provides a great tutorial of how cloud architectures vary for Flickr, Facebook, SlideShare and Twitter, and explains how Java applications can be made highly scalable on the Azure platform.