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Gartner Predicts Coming Public Cloud 'Duopoly'

Amazon Web Services and Microsoft Azure are set to dominate by 2019, the firm says.

Gartner, Inc. has looked into its crystal ball and seen that the competition in public cloud will remain a two-horse race into the future.

The analyst firm adds that although there may short-term benefit, in the long term it may be customers that suffer.

"By 2019, 90 percent of native cloud IaaS providers will be forced out of this market by the Amazon Web Services (AWS)-Microsoft duopoly," Gartner said in a research note on Wednesday.

AWS has long been the dominant platform in the public cloud market, while Microsoft has been steadily solidifying its No. 2 standing over the past few years -- outpacing the likes of Google, IBM and Oracle -- so Gartner's conclusion is not surprising.

The firm noted that both AWS and Microsoft "significantly" grew their cloud businesses last year, "while other players are sliding backward in comparison." They also have the edge over other competitors in terms of compute power, services and pricing, according to Gartner.

This is dire news for IaaS competitors in mature markets. However, Gartner concedes that vendors based in developing markets, where neither AWS nor Azure is as entrenched, could still pose a challenge. Gartner points to Aliyun, the cloud computing subsidiary of Chinese e-commerce giant Alibaba, as an example of a viable contender.

Gartner foresees the AWS-Azure duopoly as being a double-edged sword for organizations; while they may initially benefit from intense price- and service-based competition between the two vendors, the absence of other competitors may mean those benefits are short-lived.

"The competition between AWS and Azure in the IaaS market will benefit sourcing executives in the short to medium term but may be of concern in the longer term," said Gartner research director David Groombridge in a prepared statement. "Lack of substantial competition for two key providers could lead to an uncompetitive market. This could see organizations locked into one platform by dependence on proprietary capabilities and potentially exposed to substantial price increases."

About the Author

Gladys Rama is the senior site producer for RCPmag.com and senior editor of AWSInsider.net.

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