Microsoft chipped away at Amazon cloud dominance in 2017, says Gartner

Microsoft Corp. chipped away at Amazon.com Inc.’s dominant public-cloud position in 2017, as it showed the fastest surge in growth from any cloud provider, according to a research report released on Wednesday.

Microsoft’s MSFT, +0.01%  cloud revenue clocked in at $3.13 billion in 2017, up from $1.58 billion in 2016, a 98% jump, according to research firm Gartner, which reported on the 2017 worldwide Infrastructure-as-a-Service market on Wednesday.

That means Microsoft held 13.3% of the $23.58 billion public cloud market in 2017, up from its 8.7% share in 2016. And that momentum doesn’t appear to be abating much. In its latest quarterly earnings, Microsoft said revenue from its Azure public cloud service surged 85% from the year ago period.

On the whole, public cloud revenue rose nearly 30% from $18.21 billion in 2016, Gartner said. Amazon’s AMZN, +1.14%  share of the market — through Amazon Web Services — in 2017 slipped to 51.8% from 53.7% in 2016, as cloud revenue climbed 25% to $12.22 billion, according to Gartner.

Still, what’s impressive about the $12.22 billion figure is that AWS reported half of that in the second quarter alone. In Amazon’s latest quarterly earnings, AWS revenue surged 49% to $6.1 billion.

Rounding out the top five, Alibaba Group Holding Ltd. BABA, -1.19% remained in third place with $1.09 billion in cloud revenue, up 63% from 2016. Alphabet Inc.’s GOOG, +0.49% GOOGL, +0.75%  Google Cloud Platform revenue rose 56% to $780 million in 2017, while International Business Machines Corp. IBM, -0.99%  cloud revenue rose 54% to $457 million over that period.

“Cloud-directed IT spending now constitutes more than 20 percent of the total IT budget for organizations using cloud,” said Sid Nag, research director at Gartner, in a statement. “Many of these organizations are now using cloud to support production environments and business-critical operations.”

Amazon shares are up 52% on the year, while Microsoft shares are up nearly 24%. Alphabet shares are up nearly 16% and U.S. shares of Alibaba are up 7.4%. IBM shares are down 6.4% for the year.

By comparison, the S&P 500 index SPX, -0.03%  is up 5% for the year, while the Dow Jones Industrial Average DJIA, -0.23%  is up 2.3% and the tech-heavy Nasdaq Composite Index COMP, +0.50%  is up 11.3%.