The Current Situation and Trends in the

Stage One - Industry and Top Companies Selection

Introduction

Cloud Computing Industry

Applying concepts studied in the classroom to analyze actual businesses is an important financial studies. Knowledge gained in business studies class is of little importance if the learner cannot use it to analyze the financial situations of industries and businesses and make appropriate decisions and conclusions. This project will apply the concepts studied in the course of the semester to analyze the current situation and trends in the cloud computing industry. It will also discuss the performance of the three market leaders in the industry. The cloud computing industry is one of the fastest growing industries, with some surveys projecting the industry's compound annual growth rate (CAGR) of 14.1% and others placing it even higher.

The Industry

The tech industry is one of the fastest-growing and most important industries in the modern world. Technology is the lifeblood of modernity, not only in business but even in personal lives. This project will focus on the technology industry, cloud computing in particular. Buy this excellently written paper or order a fresh one from ace-myhomework.com

Cloud computing provides on-demand internet access to remotely hosted computing resources like servers, applications, development tools, networking capabilities, data storage, and more (See figure 1). Access to cloud services enables one to carry out enterprise resource planning (ERP) without needing physical tools. Cloud service providers offer tools for ERP processes like procurement, accounting, risk management, project management, supply chain management, and compliance.

Cloud computing is essential in a modern business setup. Since setting up and managing networking and data management infrastructure is always expensive, time-consuming, and requires much expertise, cloud computing is an easier way to bypass all those difficulties. Cloud computing services that a company may outsource include PaaS, IaaSand SaaS. IaaS, or infrastructure as a service, gives clients on-demand access to cloud-hosted virtual and physical servers, storage, and networking infrastructure, which enables the client to run workloads and applications in the cloud (Golightly et al., 2022). PaaS, or platform as a service, offers clients access to an on-demand and ready-to-use cloud-hosted platform for developing, maintaining, running, and managing applications. Lastly, SaaS or Software as Service gives access to readyto-use cloud-hosted software. Even though SaaS is the most used cloud computing service, with 89% of companies using it, IaaS is the fastest growing, and in 2019, its Compound Annual Growth Rate (CAGR) was 33.7%. Cloud computing is a good choice for this project because of its importance. Using cloud services allows businesses to focus on satisfying customer needs and strategizing while cloud service providers take care of data management. All companies are now using cloud services to some degree. There are companies like Pinterest and Netflix whose core business is fully dependent on cloud computing, and they can only operate with the service. Others, like supermarkets, can operate without cloud computing technology, but using the service makes their work easier and keeps them competitive.

Global and Domestic Economies Trends

Cloud computing is a thriving and fast-growing business. By 2019, 90% of companies were in the cloud. In the same year, ReportLinker (2022) projected that the cloud computing market would grow at a CAGR of 18% to reach 623.3 billion by the end of 2023. Rimol (2019) of Gartner media also projected that by the end of 2023, the market value would be 599 billion (see table 2). This forecast is quite reliable since it predicted that by the end of 2022, the global cloud computing market would be valued at USD 494.654, but the figure turned out to be USD 490 billion, according to Statista (Vailshery, 2022). The United States is by far the highest spender on cloud computing technology. It spends more than ten times what the second-highest spender, China, spends. There are two explanations for this; firstly, the world's leading cloud service providers are located in the US (explained in the leading companies section). Secondly, America has several software companies like Google, Microsoft, Yahoo, and Facebook, which are used globally but have data centers in the US.

Country Cloud Computing Technologies Spending in US USD 124.6 billion.

China USD 10.5 billion.

The UK USD 10 billion.

Germany USD 9.5 billion.

Japan USD 7.4 billion.

Table 1: What top five spenders spent on cloud computing technologies in 2019: Source: International Data Corporation (IDC).

Even though cloud computing uses technology to solve businesses’ problems, technological advancement remains its biggest threat. Cloud computing is very expensive, and companies mainly use it because constructing and running data centers is even more expensive and requires many skilled employees and physical space. (Table 3 Shows the average amounts some companies spend on cloud computing services). If technological advancement can make it easier and cheaper to set up and maintain networking, data centers, and computing infrastructure, many companies would set up their own data centers and cloud infrastructure instead of seeking commercial cloud computing services.

Company The amount of cloud computing per month in millions of dollars.

Cloud Service Provider

Pinterest USD 10.421 AWS.

Dropbox See footnote2 AWS, Own Infrastructure.

1 (Pinterest signed a six-year deal worth $ 750 with Amazon to have access to AWS access to AWS. This translates to $10.42 per month. (Source: CNBC, 2019).

2 Dropbox had been exclusively using AWS services. However, in 2017, the company built its own data center. This move reduced the company's spending on third-party data centers by $92. However, when the cost of maintaining the data center and hiring new employees are accounted for, the net reduction is $35 million. Only 10%

Netflix USD 9.6 in 2019. 27.78 in 2023.

AWS

Whatsapp USD 2 IBM/ Own Infrastructure3 .

Facebook/ Meta

Varies4. More explanation in the endnotesi

Own Datacenters

Airbnb USD 16.675 AWS

Table 3: What companies spend on cloud services.

Industry Conditions and Opportunity to Grow

The cloud computing industry is expected to continue growing. According to Forbes Magazine (2022), cloud computing will either explode or will have exploded by 2030. One of the most notable trends in cloud computing is the multi-cloud strategy. This strategy involves the use of multiple cloud service providers, including in-house services. The strategy enables businesses to choose solutions that best suits their needs and to reduce costs, interoperability, and data issues, which always increase when a business fully depends on one cloud service. According to Santoro et al. (2023), about 93% of companies now embrace a multi-cloud strategy. Another popular strategy is the hybrid cloud strategy. This strategy which is used by about 83% of companies, involves the evaluation of needs and available resources to determine processes to run and data to store in a public or private cloud. According to Statista.com (2022), 46% of companies in Europe now fully store 100% of their data in the cloud, whether private or of Dropbox's data is still stored on AWS.

3 Facebook was hosting WhatsApp on the IBM cloud but moved it to the in-house cloud in 2017.

4 Due to its enormous storage demand, if Facebook was to use AWS, it would take up to 20% of the current AWS capacity, and this could cost the company up to 16 billion annually. (See calculation below). The company uses its own data centers, whose construction and maintenance costs greatly vary.

5 Airbnb is planning to spend $1.2 billion on cloud services in 2027. This translates to $16.67 per month from when the announcement was made.

public cloud. Research by RightScale and published on Forbes found that an average business runs 41% of its workload in the private cloud and 38% in public (Janakiram, 2018).

As already stated, the fact that data centers are difficult and expensive to set up and maintain is one of the leading reasons why the cloud service provision business is thriving. It means that as long as it is convenient to get cloud services from a third party, then the opportunity for cloud services will always grow. The need for cloud services, especially cloud storage, will always be there. Businesses like social media companies, online stores, and cloud storage service providers like Mega and Dropbox require very large storage, and an average company cannot manage a data center to handle such storage demand, and their only option is to turn to cloud service providers.

Top Three Cloud Service Providers

There are several possible criteria to determine the top three companies in an industry. This project will, however, only use market share. Figure 2 shows the market share of cloud service providers in 2022. As of 2023, AWS has the largest market share, with 34%. The figure is almost double the share of the second company, Microsoft Azure, which has a 17.6% (Borge $ Poonia, 2023). Microsoft Azure’s share is also almost triple that of its follower, Google Cloud, whose market share is 6%. Market share is a good criterion to determine leaders in an industry because it is one of the most reliable measures of success. Other factors like profitability, ROE, and market capitalization all depend on market share. AWS serves about 1.45 million companies, while Azure serves about 537,837.

The customers served by these market leaders are not mutually exclusive. Some clients use multiple cloud providers, while others use both in-house and external cloud. The top three companies have a combined market share of 55%, and this tells how dominant they are. In the third quarter of 2022, the global spending on cloud infrastructure was USD 57 billion, and out of this, about 2/3 went to AWS and Microsoft Azure alone.

AWS Microsoft Azure Google Cloud

Amazon Microsoft Google cloud's top clients are other Google subsidiaries like YouTube, Google Japan, ETC

Pinterest Shell Carrefour

Netflix eBay Twitter

LinkedIn Autodesk Airbus

Tata Motors AT&t Sky

Unilever Johnson & Johnson Cardinal Health

Sony Adobe Tokopedia

Reflection

I learned a lot while doing this assignment. Firstly, I learned the concepts of multi-cloud strategy and hybrid cloud computing. I now know that it is important to first assess goals, available resources, and customer needs before designing a cloud strategy. An optimal cloud strategy helps in reducing costs and makes work more convenient. I also learned how using cloud services can make work easier for a business. To stay competitive, businesses need to spend more time formulating strategies, assessing customer needs, and thinking of how to satisfy them. Using cloud services can give a business ample time to do these. At the workplace, this knowledge will give me options to consider while making decisions. Not every piece of knowledge that a person acquires needs to be applied immediately. Some knowledge help by widening an individual's perspectives hence offering more options for consideration during decision-making. For instance, when there is some data to store, knowledge of cloud computing can help in deciding whether to buy physical buy storage or use cloud storage. The best decision will depend on the needs.

References

Borge, S., & Poonia, N. (2020). Review on Amazon web services, Google cloud provider, and Microsoft Windows Azure. Advance and Innovative Research, 53. Online. n.p.

Golightly, L., Chang, V., Xu, Q., Gao, X., Liu, B. (2022). Adoption of cloud computing as innovation in the organization. Sage Journals. London. DOI: https://doi.org/10.1177/18479790221093992 containerId=prUS49420022 https://www.forbes.com/sites/janakirammsv/2018/02/18/10-key-takeaways-fromrightscale-state-of-the-cloud-report/?sh=794c71ed1283

IDC. (2022). Worldwide Public Cloud Services Revenues Grew 29.0% to $408.6 Billion in 2021, According to IDC. Online. https://www.idc.com/getdoc.jsp?

Janakiram, M. (2018). 10 Key Takeaways From RightScale State Of The Cloud Report.

Novet, J. (2019, April 17). Pinterest has to spend at least $750 million on Amazon's cloud through mid-2023. CNBC. Retrieved March 13, 2023, from https://www.cnbc.com/2019/03/22/pinterest-must-spend-at-least-750-million-on-aws-ipofiling.html https://www.reportlinker.com/p05749258/Cloud-Computing-Market-by-ServiceDeployment-Model-Organization-Size-Workload-Vertical-And-Region-Global-Forecastto.html

ReportLinker (2022). Cloud Computing Platform Market by Service Model, Deployment Model, Organization Size, Vertical And Region - Global Forecast to 2027. Online.

Richter, F. (2022, December 23). Infographic: Amazon, Microsoft & Google Dominate Cloud Market. Statista Infographics. n.p Online. Retrieved March 14, 2023, from https://www.statista.com/chart/18819/worldwide-market-share-of-leading-cloudinfrastructure-service-providers/

Rimol, M. (2019). Gartner Forecasts Worldwide Public Cloud End-User Spending to Reach Nearly $500 Billion in 2022. Gartner. https://www.gartner.com/en/newsroom/pressreleases/2022-04-19-gartner-forecasts-worldwide-public-cloud-end-user-spending-toreach-nearly-500-billion-in-2022

Santoro, M., Mazzetti, P., & Nativi, S. (2023). Virtual earth cloud: a multi-cloud framework for enabling geosciences digital ecosystems. International Journal of Digital Earth, 16(1), 43-65. Online.

Vailshery, L. (2022, December 5). Public cloud computing market size 2023. Statista. Retrieved March 14, 2023, from https://www.statista.com/statistics/273818/global-revenuegenerated-with-cloud-computing-since-2009/

Yoshida, C. (2022, October 29). Council post: The future of cloud computing. Forbes. Online Retrieved March 14, 2023, from https://www.forbes.com/sites/forbesbusinesscouncil/2022/10/27/the-future-of-cloudcomputing/