Big three hyperscalers dominate globally – except for China

For most of the world the cloud market looks basically the same according to Q2 revenue data from Synergy Research Group – Amazon, Microsoft and Google claim most of it with market shares of 32%, 23% and 12% respectively. No other company could claim more than 4%.

Beyond the top three, there is slight movement depending on the regions with Oracle, Salesforce, IBM and NTT typically jostling for position.

Synergy says this global picture demonstrates the truly global nature of the cloud market, and what has made the big three market leaders requires ‘huge scale, deep pockets, constant technical innovation, a global brand, a worldwide network of hyperscale infrastructure, and a long-term corporate commitment and focus,’ which makes it hard for upstarts to seriously challenge them.

However in specific countries there is room for local players to compete by leaning on regional expertise, local credibility and leveraging regulatory or data residency requirements, but that tends to restrict them to going after relatively niche opportunities, says the report.

The Chinese cloud market is the exception to the rule, largely due to the geopolitical tensions which means western cloud providers (they are all US based) are severely restricted from operating there. The domestic market meanwhile is large enough to support the local alternatives, and the top ten players are all Chinese.   

“This is quite simply a game of scale. Between them Amazon, Microsoft and Google now have a global network of over 560 operational hyperscale data centers,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “In Q2 alone they invested over $48 billion in capex, most of which went towards building, equipping and updating their data centers and associated networks.

"However, there are still plenty of opportunities for local companies to compete in their home markets. This is a huge market that continues to grow rapidly, and in all regions or major countries there is a long tail of medium-to-small players. The key there is to carefully focus on specific services, industry verticals or customers, where they can demonstrate an ongoing competitive advantage relative to the industry giants.”

Overall, the report says that cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $79 billion in Q2, with trailing twelve-month revenues reaching $297 billion.

The US is by far the largest cloud market, followed ‘at a distance’ by China, followed by Japan, UK, Germany and India. Together, the US, China, APAC and Europe account for over 90% of the total worldwide market, we’re told.

While the geopolitical fissure between China and the West – manifested particularly in a quasi-trade war over technology – continues, the bifurcation of the cloud market seems likely to remain as well, as is the case in other tech sectors.