
Microsoft Beats Amazon in 12-Month Cloud Revenue - samaysharma
https://www.forbes.com/sites/bobevans1/2018/10/29/1-microsoft-beats-amazon-in-12-month-cloud-revenue-26-7-billion-to-23-4-billion-ibm-third/#559c49cd2bf1
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code4tee
These numbers are very misleading considering they wrap up things like Office
into “cloud revenue.” When talking about compute cloud they are still way
behind Amazon although you don’t get that from the misleading headline.

~~~
cwyers
This is nearly a "no true Scotsman" definition of cloud revenue, where if
Amazon doesn't have a product in a market segment it shouldn't count. Google
and Microsoft both have offerings in the cloud SaaS office suite market
segment, and it's a real liability for Amazon that they do not.

~~~
dcolkitt
Not really. When people buy Office 365, they're primarily purchasing a the MS
Office product, and the cloud just happens to be the mechanism of delivery.
That doesn't really make this cloud revenue.

Imagine if MS was forced to "unbundle" Office 365. Consumers could purchase a
license to run MS Office on any platform. On of which might be hosted Azure.
What percent of the Office 365 revenue would accrue to the products division
compared to the cloud division. Sincere guess: 90%+.

Another hypothetical scenario. Imagine if Apple offered a deal on iPhones. Get
an iPhone for free as long as you sign up for a grossly overpriced $1000
iCloud contract. All of a sudden Apple would have hundreds of billion in
"cloud revenue". But no reasonable person would all of a sudden say that
they're now the biggest cloud provider in the world.

~~~
txcwpalpha
>Not really. When people buy Office 365, they're primarily purchasing a the MS
Office product, and the cloud just happens to be the mechanism of delivery.

And when people buy Amazon RDS, they're primarily purchasing a database
product, and the cloud just happens to be the mechanism of delivery.

Imagine if Amazon was forced to "unbundle" Amazon RDS. Consumers could
purchase a license to run the database on any platform. On of which might be
hosted AWS. What percent of the Amazon RDS revenue would accrue to the
products division compared to the cloud division...

\--

Yes, this is the literal definition of a "no true scotsman" fallacy.

~~~
addicted
But there are unbundled DBs that people run. PostgreSQL, mongo, MySQL and the
majority of those are run on the AWS cloud.

There is clearly a distinction here. For example, I don’t know if the word
Azure is even mentioned when I go to buy an O365 license.

~~~
amf12
> But there are unbundled DBs that people run. PostgreSQL, mongo, MySQL

And people can still buy standalone Office installations.

> For example, I don’t know if the word Azure is even mentioned when I go to
> buy an O365 license.

How does this matter? Microsoft includes this as Cloud revenue and not Azure
revenue.

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lleims
Ben Thompson of Stratechery precisely wrote about this last week:

>Given this week’s theme, though, I wanted to focus on AWS: revenue was up
46%, and while that may be lower than Azure in percentage terms, it is almost
certainly higher in absolute terms. AWS had $6.7 billion in revenue last
quarter, while Microsoft’s entire Server Products and Cloud Services — the
majority of which remains on-premises — was $5.7 billion. Microsoft of course
has other cloud revenue, including Office 365 and Dynamics 365; those are SaaS
products though and generally don’t compete with AWS.

[https://stratechery.com/2018/ibm-red-hat-follow-up-
microsoft...](https://stratechery.com/2018/ibm-red-hat-follow-up-microsofts-
earnings-amazons-earnings/)

~~~
browsercoin
wonder how much of those were attributed to Serverless revenues....probably
negligible.

2018 is almost over and I still don't know if I should go fully serverless,
more importantly, which cloud vendor has fixed the "cold startup time" for
serverless functions. Google seems quite promising but still no recent study
has been done on this. Would somebody like to see a test on this done? I've
been wanting a straight up answer for a long time but hard to find a
consensus, seems to be all over the place.

~~~
jacques_chester
> _which cloud vendor has fixed the "cold startup time" for serverless
> functions._

I'm interested in this problem area, so I would be interested in your
definition of fixed.

~~~
browsercoin
no warm up period despite sporadic use.

~~~
jacques_chester
It will depend a lot on "sporadic". The dominant factor is where your workload
sits in the warmth hierarchy. RAM and disk space are limited, so less-frequent
workloads will eventually be evicted from worker nodes.

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xchaotic
Very anectodal, but some things are better on Azure, because they were late to
the party, for example azure blob storage. It costs the same as s3, but it
supports journaling, so you can do journal archives. You can run your main
thing on aws and keep backups on azure. If you wanted backups with journaling
on AWS, you'd have to use EFS at minimum, which is orders of magnitude more
expensive.

~~~
outworlder
Disclaimer: also very anecdotal: However, most things are way worse than
either GCP or AWS.

Azure is just now rolling out availability zones. There are strange
constraints everywhere, like you can only use premium storage accounts with
specific VM types. You cannot use the same premium storage account for blobs.
In general, not all configurations of skus for storage accounts, vms and disks
are supported. You need to match availability set skus between scalesets and
load balancers. If you connect an internal 'standard' load balancer to an
instance, then it cannot reach the internet anymore. You can only attach one
internal and one external load balancer to a scale set. You can't use the
internal load balancer to loopback (same as internal AWS NLBs, but AWS has
other options).

And so on. It all seems poorly integrated. Budget 5x as much time for a
similar deployment on Azure as compared to AWS or GCP. Add more buffer if you
need flexible automation, as you'll bump into those edge cases often as people
change parameters.

They have a ridiculously huge amount of features compared to the other two
major cloud providers, but integration between them is iffy. It is improving.

AKS seems pretty good, although it's still new and people are reporting
issues. But it is promising, you can actually tweak quite a few things, and I
have high hopes for the compatibility story (even more so than GKE). AWS's EKS
is a marginal implementation at best.

On Azure AD, the tables are turned: it's AWS that provides an inconsistent
story. There are many options, none are as well polished compared to Azure.

They did learn from some AWS mistakes. But technically speaking they have a
bunch of polishing to do.

~~~
013a
EKS is, without a doubt in my mind, among the worst products Amazon has ever
released. You pay $0.20/hour for the "benefit" of a managed high-availability
control plane, no matter the size of the cluster, then are forced into a
seemingly incomprehensible mess of CloudFormation templates to spawn a set of
VMs which you now have to manage yourself.

It makes no god damn sense. They had every opportunity to look at how Azure or
Google were doing it and just straight-up copy it. For Christ's sake, they
were over a _year_ late to the game.

I remember during the original announcement, maybe its documented somewhere,
they announced that Fargate was coming to EKS "eventually". They don't even
have _managed worker nodes_ for normal VMs, if their intention is to bring
Fargate as well we literally won't see it for another two years. It took them
over six months to get from announcement to GA.

The only good thing I have to say about it is that it's pretty reliable. Which
isn't saying a lot because it doesn't do much, but they're happy to charge you
$150/mo for what it does.

Did I mention it takes over 20 minutes to create a new cluster? Well,
actually, they "call" it a cluster, but its really just the control plane. The
actual cluster can take up to 30 minutes for everything to actually connect
and be usable. My company was interested in doing a "pristine" staging
environment for every/some PR, throwing it away afterward. Interesting idea.
Not worth it on EKS because their performance is so god awful.

EKS is literally the reason why we abandoned AWS in favor of Google Cloud. I'm
not suggesting that the rest of AWS isn't overall pretty great, but when
nearly all of your workload is defined as "90% inside kubernetes, a few cloud-
managed queues, and blob storage" Amazon isn't doing themselves any favors by
ignoring the most interesting infrastructure technology to be released in the
past five years. Oh, and our bill dropped by ~50% because preemptible
instances on GCloud are actually easy to use, instead of the sheer insanity of
trying to integrate spot fleets with an eksctl cluster.

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alexeldeib
These numbers are so misleading. I understand why they are the numbers
published, but AWS vs Azure last time I heard real numbers was approximately a
3:1 market share ratio.

Including Office 365, Dynamics, etc doesn't make sense to me. We don't include
Prime in Amazon Cloud, AFAIK.

~~~
phillipcarter
Not sure what the article is counting, but at least in the Q1 earnings call[0]
Office 365, Dynamics, etc. are separate:

[0]: [https://www.microsoft.com/en-
us/Investor/earnings/FY-2019-Q1...](https://www.microsoft.com/en-
us/Investor/earnings/FY-2019-Q1/press-release-webcast)

(Disclaimer: I work for microsoft)

~~~
alexeldeib
I'm also an MS employee. Are you sure no Office service revenue is included? I
assumed from the size of the gap they must be piling it in. If not, that
leaves an even larger unaccounted-for gap between Azure and the claimed 24
billion.

Under C+E, the last time they tipped the hand on cloud revenue it was ~18
billion with about a third from Azure AFAIK. To me, that is woefully
misleading to compare us on 1:1 terms with AWS.

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JeromeLon
According to Gartner
([https://www.gartner.com/newsroom/id/3884500](https://www.gartner.com/newsroom/id/3884500)),
the 2017 revenues were:

Amazon: 12.2B

Microsoft: 3.1B

Assuming Amazon continues on the same 25% YoY trend, it would be 15B in 2018.
Microsoft could beat that number by reaching a 400% growth rate. That would be
pretty amazing. But it's not the case.

~~~
txcwpalpha
This is comparing totally different numbers than what is being compared in the
OP.

I'm not exactly sure what Gartner includes in its "IaaS" revenue figures, nor
am I sure what Forbes is including in its "cloud" revenue figures, but even
Amazon's official press release [1] (which is what the OP is comparing) gives
completely different numbers for 2017 AWS revenues than Gartner.

1: [https://ir.aboutamazon.com/news-releases/news-release-
detail...](https://ir.aboutamazon.com/news-releases/news-release-
details/amazoncom-announces-third-quarter-sales-29-566-billion)

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simonebrunozzi
(disclaimer: I was at AWS from 2008 to 2014, and VMware from 2014 to 2016)

Microsoft have been playing this game for years now. It's a joke.

Anybody with just a little sense of how the industry works knows that AWS
still leads the market with 80% to 90% penetration.

Microsoft should be punished for misleading the public this way. And some
analysts should be fired for not knowing better.

~~~
partiallypro
Even if you exclude Office 365, etc there your statement that AWS has 80-90%
penetration is absolutely false. AWS has about ~45% of the market, Azure, GCS,
IBM and Rackspace round out the top 5. Amazon & Google also both include their
Office Suites in their Cloud numbers...so, it's not "a joke." Everyone does
it. No one denies that for compute AWS is #1, right now.

~~~
simonebrunozzi
You are blatantly wrong. Man, I've been in this industry for a long time, and
I met literally thousands of cloud computing customers, from startups to large
corporations.

The current state of affairs is that AWS still dominates. Your claim of 45%
shows that you are simply repeating what some myopic analyst has written. Talk
to industry experts, and you'll see why I'm right.

~~~
NicoJuicy
In Belgium, I see way more roles for Azure than for AWS. Perhaps some bias for
both of us, speaking to industry experts aren't numbers

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MrTonyD
I work for a company that sells software which is often deployed in the cloud.
I'd say the ratio is about 30 to 1, with AWS far ahead. I'm always surprised
when somebody starts talking about Azure - they usually work for a company
where some executive was talked into Azure by Microsoft.

~~~
nunez
or companies that are already 100% Microsoft based

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boulos
Disclosure: I work on Google Cloud.

There are arguments on both sides about "Should Office count as Cloud
revenue?". We have the same decision regarding GSuite. If you take the "Cloud
is anything a business depends on" argument, then it obviously should count
(but then all sorts of things like SaaS would count).

I like to think of this from an investor's standpoint: what do they really
want to know? In _my_ estimation, they want to know about potential hyper-
growth market opportunities for the company.

For Microsoft, more than anyone else, _Office_ isn't a high growth
opportunity. There is some amount of revenue uplift from customers "upgrading"
from Office on prem to Office 365 (like Adobe when they forced Creative Suite
to be subscription) but I doubt there are going to be lots of net new
customers just because Office is on a subscription model. By contrast, Cloud
_infrastructure_ is a large opportunity for Microsoft.

For Google (and to some degree AWS), "productivity suites" is actually a
reasonable growth market, particularly as market share often comes from
Office. However, the raw productivity market is still "only" $XXB (it's
predominantly $X/seat, and there are only so many employees in the world)
while people talking about "cloud" usually are talking about the opportunity
being "all money spent on IT".

tl;dr: I watch the YoY "Azure growth was XX%" numbers and ignore the headline
revenue.

~~~
espeed
If Google Cloud included all Google services (such as Google Search) that run
on it as "customers", that would change the numbers a bit.

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Upvoter33
Microsoft trying to win the PR battle...

~~~
Terretta
To be fair, the VP of Strategic Communications at SAP in 2011, and Chief
Communications Officer at Oracle from 2012 to 2016, surely has no dog in this
hunt.

// The enemy of my enemy...

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theDoug
Am I reading correctly that they're including LinkedIn as Cloud revenue?

~~~
whoisjuan
They include all their SaaS offering in their Cloud revenue I believe.

~~~
pmart123
I think Linkedin is classified in the Productivity and Business segment.

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leroman
I came to the comments fully expecting first comment to show false
advertising. This is what I come to expect from Microsoft, I just don't trust
anything coming from their PR department. This can't be good for Microsoft.

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ironfootnz
You can now scale excel in the cloud.

~~~
pmart123
In seriousness, isn't this where Microsoft should have a competitive
advantage? If Excel integrates with Azure easily, doesn't it incentive Azure
adoption? I guess I'm picturing a bank analyst running a derivatives model
that in the background, spins up 10 Azure server-less functions in parallel
that hit a database hosted on Azure? The banker is now happy Excel "works
quickly" but it really is just connects a front-end people are comfortable
with alongside cloud resources?

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h1d
Azure interface is such a crazy mess I don't know how prople live with it.

It's so MS with 50 menus with uninteresting options intertwined and error
messages usually make no sense, just like Windows.

I've even chosen to use another provider for running Windows, even though
running it on MS feels more safe.

I'll never want to work for a company with pure MS stack.

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bradhe
Cloud revenue numbers are database benchmarks for 2018

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tanilama
Oh, that Forbes author once again...

