Bidding war for data storage

With more sophisticated AI & Machine Learning solutions the requirement for data sources will increase dramatically. Therefore the cost of data storage will be important for the future. We will probably see a more intensive “bidding-war” between the large vendors like AWS, Google, Alibaba Cloud, Azure & IBM, for market shares of the attractive “Cloud Consumption” market

It is probably fair to say that most of us know that “cloud storage” is the future as the digital world grows exponentially and the need for fast processing of Big Data heightens across virtually every industry. In essence, moving to the cloud sounds like a bit of a no brainer given that it gives access to data from anywhere, almost unlimited power and greatly improved security and encryption to any business or individual. This is even more important with the prevalence of IoT technology and the growing application of AI to make business decisions.

However, whilst we all appreciate the value of the cloud, choosing the right support and provider is becoming a tough decision as the likes of Amazon, IBM, Google, Microsoft and Alibaba, all major technology players, make their own unique case. Each of the providers have their benefits and which you choose depends on the needs of your enterprise but in order to secure the larger contracts, we may start seeing increasingly hostile bidding wars between the major players.

Current state of play

In terms of revenue, Amazon and Microsoft Azure services lead the way. In fact, in 2017, Amazon Web Services (AWS) was responsible for all of Amazon’s operating income. That statistic alone shows how valuable securing business in cloud storage is for these major players.

Company filings shows the annual revenue run rate for the major providers in 2018 as below.

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In a survey conducted by Rightscale in 2018, of around 1,000 respondents 68% said they were using AWS services, 58% Azure and 19% Google with smaller volumes for the other providers. It should be noted that the Microsoft Commerical Cloud revenue includes that from Office 365 packages which dominates the desktop application market. The actual commercial package is more like G-suite and AWS is probably much further ahead than we realise.

In October 2018, it was heavily speculated that AWS had won an exclusive provider contract worth $10 billion for the Pentagon weapons defense data storage. Whilst the other providers have protested this, it certainly laid down a marker as to the current state of affairs. However, there are intrinsic risks with selecting only one provider, certainly in an industry like defense and that comes down to security. What if AWS was hacked? If all data is stored in one location the Pentagon is suddenly incredibly vulnerable. Spreading their data across Connected Clouds and providers could have incredible cyber security benefits, especially as these vendors venture into the world of enhanced technology such as quantum computing.

However, the Rightscale survey suggested that the likely future was for enterprises to start selecting multiple cloud providers in a sort of hybrid approach. The customers will start to pit the cloud providers against each other for their business.

All of the major public cloud providers now have partnerships with private hybrid options. Amazon work with VMWare, Microsoft Azure hooks into all the Windows Server customers and Google Cloud integrates with Cisco to form full stack style systems.

In October 2018, IBM invested $34 billion in purchasing Red Hat in a bid to keep up with Amazon, Microsoft and Google when it comes to public cloud services. It is thought this will enable them to scale at greater speed and manage their data far better than ever before. The expansion has already gone into their open source portfolio at the start of 2019 with the launch of IBM Q.

It looks like the investments these companies are making have a view to longer term contracts like that of The Pentagon, enabled big businesses to get full value out of their providers. Full stack equals large returns.

AI and Machine Learning

AI and machine learning technology come hand in hand when we talk about cloud computing. With Alexa and Google Home on the market, AWS and Google Cloud are arguably the front runners in this respect but similarly, Microsoft have their own IoT services that combine with Azure and IBM have the ever-powerful Watson assistant. Oracle now use machine learning and AI for automated and self-healing cloud services.

As hot as the cloud storage and infrastructure race becomes, it will probably be guided by the AI and ML offerings. Companies that see value in Alexa skills will probably opt for AWS and the stack it provides. Similarly, AutoML from Google Cloud will benefit the companies looking to rapidly expand their machine learning capabilities as speed in relation to their business needs.

Given that each of the major providers have their own key skills and deployments, it is likely that several of them could suit at any one time and the key to success will be in creating a full stack solution in order to win the bidding war.

What about smaller companies?

There is a lot for enterprises to consider when selecting a cloud storage provider and smaller companies are not going to want to limit themselves to just one option. The future may be in the ability of having a portfolio of solutions and finding the best provider for each of those. Given that AWS is far closer to that full stack than any of the other provides, following their partnership with VMWare they were able to streak away during 2018. However, recent investments are showing the market as closing meaning that individual enterprise architecture strategies will have a big say in the vendor selection.

As well as operating costs, the different providers have varying storage prices based on the amount of data you hold, and it is worth investigating all of the options before making a decision. For example, there is no value in spending budgets on AWS if it cannot integrate with the rest of the business technology.

Will there be a bidding war?

In reality, the likes of Microsoft, Amazon, IBM, Google and Oracle have been in a bidding war for a number of years, whether it be cloud storage, AI, mobile operating system or private architectures. With the continued scaling of Big Data, it has become even more prevalent as they are better equipped to develop at pace, building game changing deployments.

The key to success will be scale and speed and whether organisations can fulfil their needs via one provider. Part of that need will include cloud storage but the goal for vendors must edge towards developing full stack solutions if they want to win the bidding war of large scale, long-term contracts.

Next action?

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