ADVERTISEMENT

Amazon got bigger than Microsoft by beating it at its own game

Amazon's Web Services division is growing three times faster than Microsoft's.

  • Amazon
  • Amazon's cloud-computing business is growing three times faster than Microsoft's — and the potential market continues to expand.
ADVERTISEMENT

When Amazon came online in 1995 selling books, Microsoft already had two decades of computer-selling experience under its belt.

For the next 20 years, despite Amazon's skyrocketing growth, Microsoft maintained it's lead. But Amazon's web services division, called AWS, was quietly sneaking up. And last week it finally paid off. On Wednesday, Amazon officially surpassed Microsoft's market value, making it the third-largest publicly-traded company in the United States.

In 2017, AWS brought in $18 billion of revenue for Amazon — 20% less than Microsoft's competing cloud service's $27.4 billion, but has been growing at a much more rapid pace. From 2016 to 2017, AWS revenues grew 42% from $12 billion to $17 billion, while Microsoft's cloud revenue contributions grew just 9%, according to each company's respective balance sheets.

ADVERTISEMENT

And when it comes to clients who are actively using cloud services, Amazon's lead becomes even more clear:

As the chart from Credit Suisse shows, Amazon's on-ramps — or number of clients tapping into AWS data centers to do business — far outpaces any competitor, and are more than double Microsoft Azure's.

And while the two companies jockey for position, both in cloud-computing and in the race for market cap, they may be able to grow their businesses together. The size of the cloud will grow significantly, to $342 billion by 2021 according IHS Markit. That's a compound annual growth rate of 22% — something both Amazon and Microsoft would be more than happy to keep up with. Their current revenues combined are just one-sixth of what the market is expected to reach.

"AWS has the clear lead as reported by Cloudscene," Credit Suisse analyst Sami Badri wrote in a note. "However, we believe there is more than enough demand for the other players to benefit as well."

Amazon's stock price has gained 72% over the past year while Microsoft's has climbed 42%.

FOLLOW BUSINESS INSIDER AFRICA

Unblock notifications in browser settings.
ADVERTISEMENT

Recommended articles

Egypt, Nigeria, and South Africa ranked as Africa's most polluted countries in new report

Egypt, Nigeria, and South Africa ranked as Africa's most polluted countries in new report

10 African countries with the lowest life expectancy according to the World Bank

10 African countries with the lowest life expectancy according to the World Bank

Kenyan women are more obese than their men - here’s why

Kenyan women are more obese than their men - here’s why

Africa’s richest man Dangote stands between Europe and $17 billion in revenue

Africa’s richest man Dangote stands between Europe and $17 billion in revenue

After months of exchanging blows, Kenya and Uganda takes steps towards resolution

After months of exchanging blows, Kenya and Uganda takes steps towards resolution

Africa's first black billionaire could join $2.9 billion Vivendi bid for MultiChoice

Africa's first black billionaire could join $2.9 billion Vivendi bid for MultiChoice

10 most dangerous African countries in 2024

10 most dangerous African countries in 2024

Russia’s nuclear influence expands further north of Africa

Russia’s nuclear influence expands further north of Africa

Navigating the future: How AI transforms selling on Amazon

Navigating the future: How AI transforms selling on Amazon

ADVERTISEMENT