Cloud Computing: A 2-Horse Race Between Microsoft Corporation and Amazon.com, Inc.?

By Markets Fool.com

Predicting the size and scope of cloud-related sales, let alone which of the industry leaders are truly leading the way from a revenue perspective can be frustratingly difficult. For example, research firm IDC a year ago suggested cloud revenues would jump "25% in 2014, reaching over $100 billion." Contrast that estimate with Synergy Research Group's data from mid-2014 indicating trailing-12-month cloud-related revenues were in the $13 billion-plus range, and it's easy to see how even industry insiders find it difficult to nail down the potential of the cloud, let alone which providers are leading the way.

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The difficulty stems in part from some of the biggest players -- including Amazon.com and Google -- refusing to break out cloud-specific revenues, choosing instead to lump them into their respective, "other" categories. With that said, there's enough data to get a sense of who the prime players are and, at the least, estimate revenues. Another means of testing the waters is to talk to the folks directly responsible for implementing cloud solutions for their organizations, which is what Piper Jaffraydid recently, to the chagrin of Google.

Survey says...
While not necessarily what a statistician would call a representative sample, Piper's annual survey of chief information officers around the country included asking 112 CIOs who their preferred public cloud provider is. Not surprisingly, Amazon.com and its AWS (Amazon Web Services) business unit topped the list of favorite cloud solutions, named by 35% of the CIOs in 2015, up from last year's 33%, according to a report in The Wall Street Journal.

Next in line with the CIOs in this poll was Microsoft , selected by 21% as the cloud provider of choice, a slight improvement over 2014's 20%. Like Amazon.com, Microsoft at or near the top of a cloud provider's list isn't a surprise; CEO Satya Nadella has made no secret of his plans to dominate the cloud market, one of his two "mobile-first, cloud-first" strategic pillars.

What was somewhat surprising was where Google stands among CIOs according to Piper's survey. About this time in 2014, Google was pegged by 12% of the tech leaders as their first option for cloud services. This year? A mere 7% said they prefer Google over the other providers. What makes Google's backsliding surprising is that it comes in spite of its concerted efforts in pouring considerable time, energy, and money into rolling out new cloud applications and services.

But wait, there's more
It would be easy to discount Piper's survey because of the aforementioned limited sample size, but Microsoft's rise in the cloud, Amazon.com's continued strength, and Google's loss of steam are supported by separate data as well. According to one report by Synergy Research Group conducted at the end of Q2 2014 of the five primary cloud service providers, Microsoft grew the fastest -- by a wide margin. Microsoft's market share cloud growth of 164% was nearly twice that of another behemoth going all in, IBM .

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Up 86% during the same period, IBM's cloud efforts are beginning to pay dividends. A bevy of new data centers across the globe, $1 billion investments in Platform as a Service (PaaS) for cloud developers and its cloud-based Watson big data supercomputer have propelled IBM up with the Microsofts and Amazon.coms of the cloud world.

As for Google, despite hosting cloud-specific conferences, incenting developers to expand its solutions, and cutting cloud services costs by as much 79%, its popularity among key tech execs continues to wane. And with cloud-related revenue estimates of a mere $1.6 billion last year -- Google doesn't share specifics -- compared to Microsoft's nearly $4.5 billion in annualcloud revenues, along with an estimated $4 billion for Amazon.com's AWS unit, both are head-and-shoulders above Google. IBM, as of last quarter, isn't far behind the two leaders, boasting a run rate of over $3 billion in cloud-related revenues. Factor in the level of IBM's cloud growth compared to its peers, and it could be a three-horse race before long.

The article Cloud Computing: A 2-Horse Race Between Microsoft Corporation and Amazon.com, Inc.? originally appeared on Fool.com.

Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), Google (C shares), International Business Machines, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.