In 2022, cloud infrastructure services grew 23%, reaching $65.8 billion in the latest quarter. From today onwards, the cloud is consolidated as one of the pillars for the digital transformation of companies of the future.
As abstract as it may seem, the cloud is already part of our daily lives. What a few years ago was a mega evolution in the storage sector (especially for those who could use floppy disks) has now become a sector that generates hundreds of millions of dollars every year.
For those who still do not understand the concept of “cloud” (or cloud, as it is also called), this is nothing more than the ability to store files on different servers on the Internet. An example of this is Google Photos, which is a service that uploads all the photographs taken by an Android phone to the network (for storage purposes). There’s also Google Drive, which is used to store documents, videos, and audio, among other formats.
Therefore, if for some reason a person loses their phone or computer, they will still be able to access their files thanks to this type of service.
And just in case, this technology isn’t literally about uploading files to clouds in the sky. No, these are stored on servers (a collection of computers) which are usually strategically located in different countries and which are connected 24 hours a day to respond to requests that cloud users make to them.
Additionally, there is a specialized line of cloud services for businesses. As Joaquín Saldaña, director of strategy and marketing at Huawei in Latin America, explains, with digital transformation many companies require cloud services to meet the needs of their operations and customers. However, having one or more of your own servers is extremely expensive, especially for SMEs (which in countries like Colombia make up the majority of the entrepreneurial fabric). This is where big tech companies come in, as their job is to put these servers at the service of third parties.
In short, what cloud infrastructure offers is the computing power for data storage and processing that 21st century businesses need.
Some use cases offer, for example, companies the ability to recover their data and files in the event of possible crisis scenarios, such as a hack, data center service failure or power outage.
Huawei Cloud’s director of business development, Fernando Vegas Cueto, explains that even in countries like Colombia it is mandatory for banks to have these types of services, since according to regulation they are seen as content recovery plans that mitigate the risk of loss of information for cardholders and financial operators. institutions themselves.
Another use case, which especially benefits MSMEs, is storing inventory in the cloud. This not only allows you to have better control over your accounting, but also allows you to offer your products in your e-commerce. There are some variants specialized in content distribution, i.e. servers that optimize the loading of this type of file when consulted on the Internet. Industry experts guarantee that these types of solutions are important, as they facilitate navigation in e-commerce and, therefore, improve the purchasing experience of potential customers.
There is also the educational sector. Solutions like Moodle are very popular in academia, with cloud services a university can complement this experience by storing videos of live lectures, tutorials, audiobooks and other class-related content.
In short, cloud services have become a notable attraction for companies, not only because they allow them to access, at a reasonable price, the computing and processing capabilities offered by these machines, but also to the software solutions that companies dedicated to the cloud they are constantly exploring. . develop, which translates into greater opportunities for innovation, as well as staying up to date in a sector that changes year after year.
A growing business
The latest report provided by the Canalys company shows that in the last quarter of 2022 the cloud infrastructure business grew by 23%, which translates into revenues of more than $65.8 billion.
Amazon Web Services (AWS) is the most represented provider on the market (32%), followed by Microsoft Azure (23%) and Google Cloud (10%), among others (35%).
Despite the constant growth that enterprise demand for cloud services has demonstrated, this market slowed by almost 10 percentage points last year. According to Canalys, this slowing pace of growth is due to rising costs that the public cloud is experiencing (driven by inflation), which is forcing customers to optimize their spending after significant investments in information technology (IT) carried out in the last three years.
“Macroeconomic uncertainties are contributing to a more conservative approach to IT budgets. A growing number of customers are adapting cloud strategies to gain greater efficiency and control. This includes considering repatriating certain cloud workloads to private or co-located data centers to reduce costs, driving greater adoption of hybrid and multi-cloud strategies. While business demand for cloud services persists, the growth rate of cloud infrastructure services will continue to slow in the coming quarters. In 2023, Canalys expects global spending on cloud infrastructure services to increase 23% for the full year, compared to 29% in 2022,” the company said.
Competition is convenient
As Canalys’ numbers demonstrate, the current cloud infrastructure market is concentrated, for 65%, in three big players: AWS, Microsoft Azure and Google Cloud.
Faced with inflationary scenarios, where few players enjoy large market shares, it is convenient for other companies to join the dance so that, through competition, not only the self-regulation of prices is stimulated to the benefit of the user, but also the innovation in new solutions that lead to higher quality services.
Huawei is among the companies that want to participate in this entrepreneurial race. Part of its strategy in Colombia is to differentiate itself through additional benefits such as installing its own server in Colombia (which would be added to the others it already has in the region such as Mexico, Peru and Chile), as well as having customer service available. 24 hours on 24.
However, the kings of the market do everything they can to make the competition take their crown. An example of this is that AWS continues to invest in its channel ecosystems to expand its reach to new customers. Recently, this company announced that its list of renowned clients has grown after including brands like Nasdaq, Yahoo, and Descartes Labs.
“In terms of capital investments, it has launched AWS regions in Spain and Switzerland, as well as a second region in India to continue growing its AWS infrastructure presence,” the Canalys report states.
However, the effort of others has been to focus on certain business niches, where they have demonstrated considerable importance. Microsoft Azure Arc, for example, has bet on hybrid cloud, with large customers such as Citrix, Northern Trust and PayPal.
We must also remember the infamous investment bets that Microsoft made with artificial intelligence (AI). A few months ago it became known that this company invested about 10,000 dollars in Open AI, the company responsible for the development of ChatGPT.
Although it is currently known that one of the uses that Microsoft hopes to give ChatGPT is in its Bing search engine (with which it hopes to offer more personalized search results, as well as create serious competition to Google in this sense), it is it’s no surprise that it plans to integrate this powerful AI beyond its cloud solutions.
Google Cloud also hopes to stand out in 2023. According to information collected by Canalys, this company has invested in the incorporation of key customers, including Siemens Energy, Intel, Qualcomm and Magic Leap. “In its efforts to improve profitability, Google Cloud announced an initiative to extend the lifecycle of its servers and networking equipment to six years to reduce depreciation costs in the coming quarters,” it concluded.
Everywhere you look, cloud solutions have become an attractive business amid the rise of enterprise digital transformation. A series of services that highlight the advantages deriving from the use of shared resources, as well as promoting an innovative panorama leveraging technology.
