Amazon Web Services’ stronghold over the global cloud market is showing some vulnerability as AWS’ cloud market share dropped 2 points, while Microsoft’s cloud share increased by nearly 2 points year over year during fourth-quarter 2023.
Enterprise spending on cloud infrastructure services reached $73.7 billion in fourth-quarter 2023, representing a 20 percent increase compared with $61.6 billion in fourth-quarter 2022, according to new data from IT market research firm Synergy Research Group.
“This was a banner quarter for the cloud market,” said John Dinsdale, vice president and chief analyst for Synergy, in an email to CRN. “As the market continues to grow strongly, Amazon, Microsoft and Google still account for a large share of cloud spending—their combined share stood at 67 percent in Q4. Microsoft had reason to be very satisfied, as its market share increased by almost 2 full percentage points to reach a new high.”
Dinsdale said that Google’s share “moved higher while Amazon nudged down.”
“Amazon remains far ahead of Microsoft, but the gap is closing,” he said.
CRN takes a look at the top five cloud market-share leaders of fourth-quarter 2023, which included Alibaba, AWS, Google Cloud, Microsoft Azure and Salesforce.
Cloud Spending Hits $270 Billion In 2023; Record Q4 Thanks To AI
Before jumping into the exact market-share figures for Alibaba, Amazon, Google, Microsoft and Salesforce, it is key to know that Q4 2023 was an exceptionally strong quarter for cloud providers as demand from customers surged.
“The last quarter of the year usually benefits from a seasonal bounce with quarterly spending increasing much more than in the first three quarters, but this quarter set a record. Q4 spending jumped by $5.6 billion from the previous quarter, representing by far the biggest sequential increase the cloud market has ever achieved,” said Dinsdale.
In 2023, worldwide enterprise spending on cloud infrastructure services hit approximately $270 billion, an increase of 19 percent compared with 2022.
“While economic, currency and political headwinds have diminished somewhat, it is clear that generative AI technology and services have had a major impact, helping to further boost cloud spending,” Dinsdale said. “Generative AI is clearly one of the main reasons for the strong performance, as the technology is embraced by cloud providers and enterprises alike.”
No. 3: Google (Google Cloud)
Market Share Q4 2023: 11%
Market Share Q4 2022: 11%
Market Share Q4 2021: 10%
Google’s cloud business, Google Cloud, won 11 percent share of the global cloud services market in the fourth quarter.
Mountain View, Calif.-based Google Cloud entered the cloud computing market less than a decade ago. Following the hiring of Google Cloud CEO Thomas Kurian in 2018, the company has exploded over the past six years and cemented itself as the world’s third-largest cloud player.
Google Cloud currently has an annual run rate of $36.8 billion.
Google Cloud has been steadily increasing its market share over the years. Synergy’s Dinsdale said that although Google Cloud didn’t gain a full 1 point market share year over year in fourth-quarter 2023, the company’s “share moved higher,” likely close to hitting 12 percent market share.
No. 2: Microsoft
Market Share Q4 2023: 24%
Market Share Q4 2022: 23%
Market Share Q4 2021: 21%
Microsoft is continuing to narrow the gap between itself and AWS as the king of cloud computing.
The world’s largest software company won 24 percent share of the global cloud services market during fourth-quarter 2023. AWS’ market-share lead over No. 2 Microsoft has never been closer.
“Microsoft had reason to be very satisfied, as its market share increased by almost 2 full percentage points to reach a new high,” said Dinsdale.
The Redmond, Wash.-based company has grown its global cloud market share by nearly 3 points over just the past two years, with Microsoft owning just 21 percent share in fourth-quarter 2021.
Microsoft’s “intelligent cloud” segment—which includes Azure, SQL Server, Windows Server, Visual Studio, Nuance, GitHub, Microsoft Partner Network, and enterprise and partner services—generated $25.9 billion during fourth-quarter 2023 calendar year, up 19 percent year over year.
No. 1: Amazon (AWS)
Market Share Q4 2023: 31%
Market Share Q4 2022: 33%
Market Share Q4 2021: 33%
AWS remained the dominant global leader in cloud infrastructure services, winning 31 percent share of the worldwide market in fourth-quarter 2023. The Seattle-based company has been the world leader in cloud computing for well over a decade.
However, AWS’ 31 percent share in fourth-quarter 2023 represented a 2-point share decrease compared with fourth-quarter 2022 when it captured 33 percent market share.
“Amazon remains far ahead of Microsoft, but the gap is closing,” Synergy’s Dinsdale said.
In fourth-quarter 2021, AWS’ 33 percent market share was 12 points higher than Microsoft’s 21 percent share. Just two years later, AWS’ 31 percent share is just 7 points higher than Microsoft’s 24 percent share in fourth-quarter 2023.
AWS generated $24.2 billion in sales during fourth-quarter 2023 with the cloud giant now on a $97 billion annual run rate.