Until 23 years ago, talking about Cloud Computing was pure academic talk: in 1997, the distinguished Information System professor Ramnath Chellappa was the first one to come up with the term during one of his lectures. But, almost ten years have passed before, in 2006, Amazon – today’s largest Cloud Computing company in the world – started offering IT infrastructure services to companies through web services – nowadays, popularly known as services available in the cloud.
However, what is cloud computing? What is its importance for a changing digital transformation ecosystem increasingly accelerated? In a very simple way, cloud computing can be defined as the delivery of different types of computing services – including servers, storage, databases, network, software, analysis, and intelligence – via the internet (in this case, “the cloud ”) – which can be accessed from any computer with access to it. The main objective of cloud computing, so to speak, is precisely to be able to offer flexible resources for an economy of innovations at scale. If we look at how many important cloud-based services have appeared in just over a decade, since the emergence of Amazon Web Services (AWS), we can understand the growing importance of the cloud for managed IT services.
Who are the market players?
Only two years after Jeff Bezos’ visionary steps on the cloud path did the other two major competitors appear on the market: Google Cloud, in 2008, and Microsoft Azure, in 2010. To have an idea of the great robustness of the cloud market, only in the second quarter of 2020 – which was the toughest period in the coronavirus pandemic worldwide – only Amazon Web Services reported an income of $ 10.8 billion. An increase of 29% compared to the same quarter of the previous year.
Other companies, such as Alibaba, Oracle, SAP, IBM, and Digital Ocean, enter this dispute with smaller market shares, but with solid annual growth of more than 20%. Alibaba, for example, grew an impressive 92% in 2018, with an annual income of $ 2.49 billion and a 7.7% share of the public cloud market. A curious fact is the late participation of Oracle, which joined the cloud market as a player just 4 years ago, in 2016, with the offer of “Oracle Bare Metal Cloud Services”. There is a special reason for that, which we will tell later in this article.
In the global chess of cloud computing, it is speculated that there is room for Alibaba to join its three main competitors (Amazon, Microsoft and Google) and become a globally relevant cloud platform. Currently, the platform has great relevance in China, but not in Western markets, especially when compared to Amazon, Microsoft, and Google.
For competitors with smaller market shares, such as Oracle, SAP, IBM, and Digital Ocean, a possible scenario is that they may become relevant as niche players. Digital Ocean has been positioning itself as a friendly platform for developers for a few years, with an increasing commitment to Developer Experience – a great approach to gain new customers. The platform is commonly found in non-productive environments, especially in startups. However, there are still comparatively few companies that use Digital Ocean as a platform in their production environments.
IBM has tried to compete on the IaaS model (read the three main service models below) with its Softlayer platform for a while, which offers bare metal servers at competitive prices and settings that are difficult to get compared to players with larger market shares in the segment. Therefore, IBM ends up positioning itself as an option in the public cloud that chooses to keep the same paradigms of traditional data centers, but with more resources. It does not demand the modernization of applications to be attractive.
Another platform type offered by IBM is Bluemix, which fits the Platform as a Service (PaaS) model, with almost full abstraction of the infrastructure layer that supports it.
It is also interesting to note the importance of IBM in its positioning as a niche cloud specialized in Financial Services. Historically, IBM has always been the leading technological partner for banks and other large financial institutions. From the old mainframes in the 1970s to more contemporary solutions, IBM has always remained very relevant with mission-critical solutions for financial services.
In this way, IBM gets a head start with great conditions in order to reduce complexity and speed up the launch of new products for its customers in the segment. This is a type of offer that is expected to grow over the next few years.
Oracle had a late entry into the cloud market and historically took a controversial position at times, with its CEO and main shareholder, Larry Ellison, stating that the cloud was just “a dumb idea”, only to later claim that it was a pioneer in the offering of cloud services and that would have been copied by Salesforce. Anyway, backstage rivalry between giants.
The fact is that after a few years without a clear plan for its customers – eager to consume cloud services – Oracle officially launched its own cloud and started to direct its licensing model preferentially to the cloud. Currently, the organization invests in hybrid cloud models that allow a good match of solutions with its installed base on-premise. In addition, Oracle has been commercially encouraging its on-premise customers to start consuming the latest versions of their solutions already in the cloud.
It is difficult to predict how competitive Oracle may become in the future, but the company appears to have a much more favorable horizon in a SaaS / PaaS model around its main software solutions. The IaaS model will find it more difficult to position itself against older players that are already more consolidated.
Service models: IaaS, PaaS or SaaS?
When it comes to cloud computing, an alphabet soup comes to mind: is it IaaS? Is it PaaS? Is it SaaS? In 2011, when the “as-a-service” concept of “computing as a service” started to become popular in the IT market, it was also a very important period due to the way in which these services would be marketed. With that, the 3 main models emerged:
- Infrastructure-as-a-Service (IaaS)
- Platform-as-a-Service (PaaS)
- Software-as-a-Service (SaaS)
Before cloud computing, there was the “on-premise software”, that is, the one installed and executed directly on the server of the company that makes its use.
In the cloud market, what we have are the 3 main models responding to 3 different ways of, so to speak, getting the best out of the cloud to boost your business. For example, in the IaaS model, what we have are cloud-based services where the user pays according to the use they will make as storage and virtualization. Within the corporations working under this model are: AWS EC2, Rackspace, Google Compute Engine (GCE) and Digital Ocean. The main benefit of IaaS is to offer cloud-based alternatives to on-premise infrastructures, thus, saving companies from investing in local resources, which would be far more expensive.
In the PaaS model, we have hardware and software tools available for application development. This means that developers don’t have to start from scratch when building their applications, but save a lot of time (and money) with extensive code. An example of a PaaS cloud is Heroku, a platform that supports several programming languages. It was one of the first to appear on the market, and has been in development since June 2007. Initially, it only supported the Ruby language, but currently, it supports Java, Node.js, Scala, Clojure, Python, PHP and Go.
For this reason, Heroku is considered a multilingual platform, with resources for a developer to build, run and scale applications in different programming languages. In addition to Heroku, other PaaS providers available are: AWS Elastic Beanstalk, Windows Azure, Force.com, OpenShift, Apache Stratos and Magento Commerce Cloud.
Salesforce: Saas and PaaS combined
Several companies invest in combined SaaS and IaaS models, just like major service providers. This is the case with Salesforce. Launched in 1999 by a former Oracle executive, Salesforce emerged as a SaaS CRM, where users can access their software on a recurring basis, at any time and through almost any computer connected to the Internet. Over time, however, Salesforce has evolved into its own PaaS platform model, called the Lightning Platform, where users can develop and deploy applications in the cloud just as they would do with competing cloud platforms: AWS, Google, Microsoft or IBM. The idea, however, is that the applications developed integrate with others existing on the platform.
In the next post, we’ll talk about database and cloud storage.
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