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systems/processes and “the rest” that had migrated less than 5%.4 Meanwhile the race continued to heat up, with AWS, Microsoft Azure, Google Cloud Platform and Alibaba Cloud jostling for a bigger piece of the pie (see Figure 2).

Figure 2: Global Cloud Infrastructure Spending and Growth by Company

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systems/processes and “the rest” that had migrated less than 5%.4 Meanwhile the race continued to heat up, with AWS, Microsoft Azure, Google Cloud Platform and Alibaba Cloud jostling for a bigger piece of the pie (see Figure 2).
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Cloud service provider

Full year 2019 (in billions)

Full year 2019 market share (%)

Annual growth (%)

Amazon Web Services

35 32 36

Microsoft Azure 18 17 64 Google Cloud 6 6 88 Alibaba Cloud 5 5 64 Others 43 40 23

Source: Canalys

The adoption of cloud computing by corporations was most prominent in North America, accounting for half of the global market, followed by Western Europe. The top players were targeting Asia Pacific as it had the highest growth projections – the region’s spending on public cloud services and infrastructure was valued at $26.0 billion in 2019, an increase of 47.1% over 2018.5 Public clouds were expected to grow exponentially, with spending in Asia Pacific forecasted to reach US$76.1 billion in 2023, a five-year CAGR of 33.9% (figure does not include private clouds used exclusively by one business located either on-site or hosted by a third-party service provider).

To meet data sovereignty requirements and deliver superior performance to Asia-Pacific clients, all the top providers (AWS, Azure, GCP and Alibaba Cloud) were building more data centres, including in emerging markets such as Thailand and Indonesia. While Amazon dominated globally, Alibaba Cloud was a strong number two in the region, largely thanks to its domestic market (China). Providers were eyeing South East Asia, where the market was estimated to reach US$40.3 billion by 2025, given the surge in demand from small- and medium-sized enterprises (see Figure 3).

4 https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights

/Creating%20value%20with%20the%20Cloud%20compendium/Creating-value-with-the-Cloud.ashx 5 https://www.idc.com/getdoc.jsp?containerId=prAP45431219

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Figure 3: Cloud-Enabling Technology Market – Growth Rates by Region (2019-2024)

Source: Mordor Intelligence

3. Key Players in Cloud Computing – “Big Tech”

The decade 2010-20 had seen the rapid rise of “Big Tech”, of which the four providers featured here are only a subset. The “Big Five” (Apple, Amazon, Alphabet, Microsoft and Facebook) collectively generated a staggering US$801.5 billion in 2018, with average margins of 17.3%.6 The top three players, Amazon, Alphabet (Google) and Microsoft, were strongly positioned, while Apple and Facebook remain focused on consumers. China’s Alibaba and Tencent had moved into the top ten most valuable publicly traded companies globally.

The convergence of trends in technology, social media, globalization and deregulation had propelled ‘Big Tech’ into the biggest companies in the world, overtaking former titans like Exxon, Berkshire Hathaway and General Electric (see Figure 4).

6 https://www.visualcapitalist.com/how-tech-giants-make-billions/

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Copyright © INSEAD 5

Figure 4: Largest Companies by Market Cap (2019)

Source: https://www.visualcapitalist.com/a-visual-history-of-the-largest-companies-by-market-cap-1999-today/

However, web services were only part of the businesses of the four cloud providers featured here. The dominance of Big Tech was the result of broader dynamics. The rise of Google, Facebook, Amazon, Alibaba and Tencent has changed the way we lead our daily lives, using a fundamentally different business model in which massive amounts of user data are collected and analysed by these platforms, then monetized. With the ubiquity of social media, platforms and e-commerce apps, Big Tech companies derive insights from everything bought, sold, said or done on smartphones. The internet is essentially a giant machine for sharing, processing and predicting information, made possible by cloud computing as the basis of ecosystems that collect, integrate and analyse massive amounts of user data.

While Amazon’s online store still generated most of its revenue, its non-retail segments including AWS and subscription services reported higher growth in Q2 2019 (see Figure 5). Founder Jeff Bezos had built an empire from investments and acquisitions that included groceries (Whole Foods), gaming (Twitch.tv) and fashion (zappos.com).

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This document is authorized for use only by Jia ye Li in MIS 441 – Global E-Commerce-1 taught by Richard Johnson, Washington State University from Jan 2022 to Jun 2022.

 

 

 

Copyright © INSEAD 6

Figure 5: Amazon Revenue and Segments, Q2 2018 vs Q2 2019

Source: https://www.statista.com/chart/15917/amazon-revenue-by-segment/

Although cloud computing had its roots in early efforts by companies such as Salesforce.com to offer software as a service (SaaS), the first cloud computing hosts did not emerge in earnest until 2006. AWS dominated cloud computing throughout the next decade, while Google, Microsoft and Alibaba emerged as challengers. Microsoft Azure surged with the introduction of tools for the ‘hybrid cloud’ – systems that allow companies to move some computing to the cloud but keep control of highly confidential data.7

Amazon Web Services (AWS)

Global leader AWS was the first to gain a solid foothold. With the most complete and technically advanced system, it expanded aggressively. It led in infrastructure-as-as-service, moving to expand the stack to include the Internet of things (IoT), artificial intelligence (AI), augmented reality (AR) and data analytics.

Amazon’s cloud was the backbone of Amazon’s architecture, powering everything from its smart assistant Alexa to predictions of shoppers online and its massive e-commerce site. AWS boasted an impressive list of customers including Netflix, LinkedIn, Facebook, Expedia, Cars.com, the BBC, Baidu and even NASA, which streamed images received from its space rover Curiosity, through the AWS cloud.

By 2019, only half of Amazon’s revenue came from e-commerce, and a third came from providing a retail platform for others. AWS reported profits of $9.2 billion, while profits from ‘everything else’

7 https://www.wsj.com/articles/microsoft-steps-up-push-to-dominate-hottest-segment-of-the-Cloud-11572876001

For the exclusive use of J. Li, 2022.

This document is authorized for use only by Jia ye Li in MIS 441 – Global E-Commerce-1 taught by Richard Johnson, Washington State University from Jan 2022 to Jun 2022.

 

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