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How Cloud Computing Became a Big Tech Battleground | WSJ - YouTube
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- [Narrator] IBM, Google, Microsoft,
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all are making big bets
on cloud computing.
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That's for good reason.
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Research firm Gartner forecasts
cloud computing revenues
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to exceed $260 billion dollars in 2020.
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For years Amazon's AWS led the market.
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But, that lead is starting to
slip as other firms make moves
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to bolster their cloud
computing offerings.
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In October, Microsoft
surprised onlookers when it won
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the U.S. military's JEDI cloud contract.
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It could be worth $10 billion
dollars over 10 years.
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Some in Washington expect
Amazon to appeal this decision.
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In July, IBM spent $34 billion
dollars to acquire RedHat
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and boost it's cloud business.
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So, why are tech firms going
to battle for cloud services?
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To understand, you've
got to know the basics.
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- Well, and like any market that grows
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it's strong because it
offers a value proposition
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to people that they find attractive,
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and so they shift their spending.
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- [Narrator] Cloud computing at it's core,
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is about changing the way
businesses manage data.
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Everything done online;
shopping, video, texts,
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it all takes data.
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The data is processed in behind
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the scenes computers called servers.
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Managing that equipment takes
time, energy, and money.
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When a business moves to the cloud
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it's really just outsourcing.
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In other words, tech firms like Amazon
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handle some IT services
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so businesses can focus
on what they do best.
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Outsourcing IT can generate savings.
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For example, Bank of America
adopted hybrid cloud computing
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and that reduced annual costs
by $2.1 billion dollars.
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Start-ups who uses a
cloud provider won't have
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to spend as much on a custom data center.
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They can use resources from a third party.
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In-house IT has to maintain
enough server space
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to account for peak demand.
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That can mean that your company
has a bigger data center
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than it needs on a consistent basis.
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Instead, cloud computing lets companies
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pool their resources.
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The companies use as
many servers as they need
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and only pay for what they consume.
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Companies that use the
cloud can benefit from
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the remote management of data
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in places like Ashburn, Virginia.
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Amazon, IBM, and others host
some of their data centers
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in less populated areas like this.
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Both energy and land can be cheaper here
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than say, a city center.
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That's why you see groups like Facebook
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and the NSA opening data
centers in small towns in Utah.
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There's potential for lower costs,
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the views aren't bad, either.
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Cloud computing is tougher for
some businesses than others.
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In the years after the launch of AWS,
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businesses like Netflix, Lyft,
and Slack launched products
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with intense IT demands.
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They were a natural fit
for cloud computing.
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Some companies who are moving
to the cloud today are bigger,
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and are in more regulated industries
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like health and finance.
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They're companies like J.P. Morgan
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which operates under strict standards
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from regulators like FINRA.
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In 2017, Dana Deasy was the
chief information officer.
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At the time, he moved portions of
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the financial giant's data to the cloud.
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His next task will be
even more formidable,
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do the same for the Defense Department.
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- So, I've mentioned we have a need
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for an enterprise cloud,
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so we have massive compute
capability where we can start
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to store our data in a more common way
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and make it accessible.
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- [Narrator] The multi-billion
Joint Enterprise Defense
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initiative is supposed to centralize
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the military's technology
and reap gains in innovation.
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Getting there will mean untangling years
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of disparate IT systems.
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That will take time, money, and expertise,
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which is why Microsoft's
potential win is so significant.
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Amazon is no longer the only
big name in cloud computing.
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Microsoft's Azure Cloud service
was announced three years
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after Amazon AWS took an early lead.
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More than a decade has passed
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and AWS still dwarfs Azure in revenues.
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But, more deals are on the horizon.
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- The cloud markets are
still relatively small.
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So, their growth rate naturally
is going to be higher.
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And we do see that growth
rate coming down slightly
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over time as the cloud markets get bigger.
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But, the strong growth rates
are still driven by the fact
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that people prefer cloud models
over the traditional models
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for a lot of their work loads.
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- [Narrator] Which is why you see
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the largest firms in tech
betting big on the cloud.
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Billions of dollars hang in the balance.
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