A transition to cloud has been underway for the best part of the last decade, with the current pandemic greatly accelerating this transition. The unprecedented speed and scale of the transition to working and learning from home, necessitated by the pandemic, has been made possible by the cloud. A number of trends we discuss in this report from remote working to e-learning, to online shopping and banking, to video steaming and gaming, amongst others, rely on the cloud for their storage, delivery and the rapid scale up in demand. Microsoft’s 1Q 2020 results showed an increase in cloud usage particularly in its Office 365 solution, its Cloud computing arm- Azure, and Windows Virtual Desktop; as its customers moved to work and learn from home. Azure was the fastest growing Microsoft product in the stable, with revenue increasing 59% YoY, far ahead of the 15% YoY increase in Group revenue.
AWS, the cloud computing arm of Amazon, has played a key role in the response to the pandemic. It has helped the National Health Service (NHS) in England to analyse occupancy levels in hospitals, emergency room capacity and patient waiting times to optimise the best use of available resources. Whilst in the USA, AWS enabled healthcare workers, medical researchers and public health officials working to understand and fight the coronavirus by providing a centralised repository of datasets on the spread and characteristics of the virus. AWS revenue increased 33% YoY in 1Q 2020 to US$10.2bn, ahead of Group revenue growth at 23% YoY.
Google Cloud, Alphabet’s cloud computing arm helped Loblaw, one of Canada’s largest food retailers, and Wayfair, an online furniture and home goods retailer, scale up to support exponential web traffic increases. It’s G Suite cloud based collaboration software, which has 6m paying customer, helped Netflix and German manufacturer Kaeser Compressors transition quickly to remote work whilst Twitter, Shopify, and Italian bank Credem used its video conferencing platform Meet for staff and customer meetings.
Google Cloud’s revenue increased 52% YoY to US$2.8bn, strongly ahead of the Group revenue which was up 13% YoY in 1Q 2020. Alibaba, China’s largest technology company and the owner of Aliyun, the country’s largest cloud computing business, announced in April that it would invest CNY200bn (US$28bn/ €26bn) over the next three years as it looked to take a piece of the growing global cloud pie, competing against the big three US cloud giants.
The transition to the Cloud will continue post lockdown, with the Cloud being even more omnipresent and a key enabler of both enterprises and consumer applications. Key beneficiaries from an increased cloud demand include specialised/sovereign cloud infrastructure providers such as OVHCloud, cloud based software and solutions providers, Kafka technology providers and Kubernetes providers.
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