UBS Analysts Try To Unravel Amazon Mystery

Even though cloud computing is few years old now and Amazon Web Services is considered as the poster child of public clouds, pundits and others were deeply mystified about the size of Amazon’s cloud computing efforts. There were conflicting opinions about the size of Amazon cloud, almost turning into a religious war between AWS fanboys(girls) and other cloud folks. Among the Cloud pundits, Randy Bias, CEO of Cloudscaling, gave a pretty detailed analysis and came up with a figure of Amazon IaaS business to be around 400-600M in size and growing at a clip of 10-20% annually in a major economic downturn.

From the grapevine, I understand that Rackspace (and probably others) are also growing very rapidly, but likely even Rackspace Cloud, the nearest competitor is around 10% the size of EC2 at best. Using that assumption and EC2 as a guidepost, the total Infrastructure-as-a-Service (IaaS) market is likely around 400-600M in size and growing at a clip of 10-20% annually in a major economic downturn. Pretty impressive given that the overall hosting market has been depressed.

Today, GigaOM has a post pointing to a research report by UBS Analysts that gives an estimate to the size of Amazon cloud. Some of the interesting points from the report are

• AWS revenue in 2010 will be $500 Million and it will grow to $750 Million in 2011. This will grow to $2.54 billion by 2014, a significant market share among the infrastructure players.
• The total cloud services market is estimated to be $5-to-$6 billion in 2010 and will eventually grow to $15-to-$20 billion in 2014. 
• The UBS analysts put the market value of AWS business at between $3.4 billion to $3.8 billion. 

The report offers some interesting insights into how Amazon Web Services is shaping up. It clearly shows that it is just a matter of time before the AWS revenues are so big to get out of the “others” column of their financial statement. It goes on to clearly establish the runaway leadership position of Amazon on the infrastructure front. Lastly, on a lighter note, it also proves that Randy Bias’ analysis is pretty good. These are interesting days at the cloud world.