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Analyst Sees 2016 'Street Battle' Between AWS and Microsoft Azure Clouds

Amazon Web Services Inc. (AWS), long the leader in the public cloud space and under siege from upstart challengers such as Microsoft and Google, will see even more increased competition in the new year, with Microsoft's Azure cloud the primary protagonist, according to a recent financial analyst research note.

FBR Capital Markets forecasted an annual run-rate trajectory of more than $8 billion this year for Azure, according to an article in Business Insider, a number that the publication said was about the same as that posted by AWS in 2015.

"We continue to believe 2016 will be a '206 area code street battle for the cloud,' with Microsoft firmly best positioned as the vendor to compete with AWS on the enterprise cloud front for years to come," FBR said. "We believe Microsoft and Azure have a long runway to cross-sell into their massive enterprise customer bases with a broad platform of cloud offerings for the next few years. We believe its best cloud days are ahead given our positive checks from the field around solid uptake of key cloud products (e.g., Office 365, Azure) heading into 2016."

Microsoft, with a large enterprise presence that gives it an advantage over competitors such as Google, is benefitting from new CEO Satya Nadella's focus on cloud computing, Business Insider said.

Indeed, Microsoft last fall claimed Azure is actually bigger than AWS in terms of the number of regions in which the respective services operate, and also enjoyed an edge in hybrid and Platform-as-a-Service (PaaS) offerings.

Mike Schutz, general manager of cloud platform marketing at Microsoft, made those claims at the Deutsche Bank 2015 Technology Conference when asked how Microsoft differentiates Azure from AWS.

Deutsche Bank itself backed up the FBR report. In its own research note, Deutsche Bank said, "According to Microsoft, its immediate 'land' goal is to drive the penetration of Azure, such that every Microsoft customer is using at least a little of Azure," quoted Business Insider. "Microsoft is in a much earlier stage in reaching the 'expand' part of the sales strategy, but has had some success, claiming that some customers are now well into the 'millions of dollars per year' spending level with Azure."

The financial firms' outlooks jived with a report last year from RightScale Inc.

"No surprise: AWS continues to lead overall in public cloud adoption, with 57 percent of respondents currently running applications in AWS, up from 54 percent in 2014," the survey report said. "This continues to be more than 4x the adoption rate of the closest competitor. Azure IaaS has moved into the clear No. 2 position, doubling from 6 percent in 2014 to 12 percent in the 2015 survey."

About the Author

David Ramel is the editor of Visual Studio Magazine.

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