Research: Hyperscale Dominates in the Cloud

Picture of a Data Center

New data just released by Synergy Research shows clear dominance of cloud computing by a small number of companies considered hyperscale operators. Though the results of the research come as no surprise, the data does offer helpful insights to smaller companies looking to keep up. As a business data analyst, I can see the value in the research beyond mere recognition of the industry's biggest players.

Synergy says that there are two-dozen hyperscale players that now control 68% of all cloud infrastructure services. Among the 24 companies are four names we would expect to see: Microsoft, Google, IBM, and Amazon Web Services. It is assumed that Amazon is the runaway leader given their global permeation.

Late last year (2016), Synergy released data that showed hyperscale operators had some 300 data centres among them, located across the world. The numbers suggest they could eclipse 400 at some point in 2018. The largest percentage of those data centres are located in the US (45%) with much smaller penetration in China, Japan, and the UK.

Tying all the data together is research that shows that hyperscale operators will only continue to increase their market share in future years. It all boils down to size and cost.

The Economics of Scale

As a business intelligence consultant, I find myself helping clients working within the economics of scale. The economics of scale principle clearly explains why hyperscale operators have become dominant in the cloud space while smaller companies struggle to keep up.

Hyperscale operators already possess the kind of infrastructure and software environment to offer cloud-based services. For example, hyperscale operators provided nearly half the market for things like infrastructure as a service (IaaS) and platform as a service (PaaS) in 2012. Since then, they have expanded their market share by investing in more infrastructure and developing new services.

Their advantage is money. Simply put, the biggest players like Amazon and Microsoft have the financial resources to continue developing cloud products. Their R&D teams are fully funded, they purchase hardware in bulk, and they can leverage the power of corporate revenues to attract favourable financing when it becomes necessary. Smaller companies are at a disadvantage simply because they lack size, financial resources, and clout.

This is not to say that smaller companies can't compete for what remains of the market. They can, and they should. Small companies don't become dominant market players without first competing at their own level. As a small business succeeds, it moves on to larger and more competitive markets.

As a business data analyst and freelance business intelligence consultant, I make it my business to keep an eye on things like the cloud computing and data services market. I can see what hyperscale operators are doing, and I can use my knowledge and experience to help clients compete. If your company is ready to take that next step to be competitive in a larger market, I'm here to help. Feel free to reach out at any time.


Cloud Tech –

Send Metrics Management an Email
Profile picture of Chris Scanlon

Author: Chris Scanlon

Hullo.  I'm a graduate chartered accountant with 25 years experience in blue chip businesses and the last 15 years in owner manged businesses.  My particular skill is turning data into information. Bringing the performance management of the business alive so that ...