Researcher sees Amazon facing new challenges as cloud market fragments

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Amazon Web Services is growing at an incredible pace, driven mainly by greenfield software development both by enterprises and by software-as-a-service startups. That growth shows no signs of slowing, but the cloud market is expanding in two significant new directions in which AWS faces stiff competition, writes Wikibon Chief Research Officer Peter Burris.

The first of these is the migration of legacy workloads, particularly those built on a database management systems such as Microsoft SQL Server, Oracle or IBM DB2. Enterprises are starting to move their existing workloads to the cloud, and Wikibon expects this to become a significant growth market. Burris quotes one chief information officer as saying he has been directed to move 40 percent of his existing workloads to cloud platforms, and that goal cannot be reached without migrating some core legacy DBMS-based applications.

Moving those applications is complex, and CIOs are looking for cloud providers that can offer the most favorable environment for success. AWS has fielded some strong tools and has numerous successful migrations under its belt, but Microsoft, Oracle and IBM are all working hard to defend their markets by building cloud environments specifically designed to support migrations. The three major vendors are in different stages of this transition, with Microsoft fielding the strongest support so far, Burris says.

The other new high-growth area is industrial internet-of-things. For a variety of reasons that include the limitations of the speed of light, Wikibon expects IIoT to pull the hybrid cloud to the edge rather than driving further centralization of processing. AWS is a player in that market, but it lacks an on-premise hybrid cloud solution, Burris writes.  No vendor has yet built a commanding lead, so AWS still has time to establish itself, but it will face competition from enterprise vendors with stronger private cloud stories.

It’s not that Wikibon sees big troubles head for AWS. The company will continue to grow rapidly based on its core strengths – advanced technology, customer service and strong market position. But Burris sees AWS slipping slightly in overall market share over the next five years as other players take advantage of a broadening of the cloud market. Cloud will never be a winner-take-all market, Burris concludes.

Wikibon Premium subscribers can read the full analysis and the answer to the question “How big can AWS get?” here. To become a premium subscriber, look here. Wikibon is a sister company of SiliconANGLE.

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