2016 Earnings Reports Show Cloud Migrations Continue Apace

All of the major vendors of cloud systems have now come out with their financials for the end of the 2016, and the reports continue to shine new light on just how quickly business workloads are moving to the cloud.

Consider: Amazon said that in the fourth quarter the revenues from its Amazon Web ServicesAmazon often references the sheer breadth of its services, while Microsoft often talks about how it works well in hybrid environments, with workloads mixed among cloud and on-premises solutions. Google has really emphasized data analytics, security tools, and application development. All three have been touting new machine learning and AI tools.

IBM usually isn’t counted in the top three anymore, but its numbers suggest it may deserve to be there. The company reports a variety of cloud numbers. Overall IBM said for the year it had cloud revenues of $13.7 billion, up 35 percent, but that number includes all sorts of things—even some hardware. IBM said total “as-a-service” annual run rate was $8.6 billion, up 63 percent, and that the cloud portion of its “technology services and cloud platforms segment” accounted for $1.8 billion in the quarter, though that number includes integration services as well as what most of the industry would call IaaS or PaaS. (In addition, it reported $0.6 billion in fourth-quarter revenue in its cognitive solutions segment, which includes Watson and some cloud-based analytics, though much of that would normally be classified as SaaS.)

Oracle, which reports off cycle, said in the three months ending November 30 it had a total cloud revenue of $1.053 billion, including $175 million in IaaS services, and $878 in PaaS and SaaS. Its numbers show a big increase in the latter category, up 81 percent from a year ago; but relatively little increase in IaaS, up only 6 percent. While Oracle has talked about challenging Amazon in infrastructure-as-a-service, it still seems to have a long way to go.

Among the major players, there is also Alibaba’s cloud division, which said it recorded cloud revenues of $254 million for the fourth quarter, up 115 percent vs. the previous quarter. The company has been strong in China, and recently announced a large international expansion.

All of this indicates that there is still massive growth happening in companies moving workloads to the cloud, whether these are new workloads or those being migrated from traditional on-premises infrastructure. Despite the growth, recall that the total IT market is much, much larger—by itself, IBM’s total revenue of nearly $22 billion in the quarter is larger than all of the true cloud infrastructure players combined. (The most recent quarterly revenues of the other big infrastructure players were nearly as large: Dell Technologies at $16.2 billion, and Cisco and HPE at about $12.4 billion each.)

Just about every CIO I talk to is either in the process of moving some workloads to the cloud or at least considering it, while very few outside of the startup world have completed the process. All of the signs indicate that cloud computing migration continues to pick up steam.

Michael J. Miller is chief information officer at Ziff Brothers Investments, a private investment firm. Miller, who was editor-in-chief of PC Magazine from 1991 to 2005, authors this blog for PC Magazine to share his thoughts on PC-related products. No investment advice is offered in this blog. All duties are disclaimed. Miller works separately for a private investment firm which may at any time invest in companies whose products are discussed in this blog, and no disclosure of securities transactions will be made.


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