Can startups beat AWS and Alibaba to meet the increasing demand for cloud computing?

Photo credit: Andrey Yanevich

The market for cloud computing services is growing.

Between 2017 to 2020, its revenue is set to nearly double to more than US$300 billion. This is despite the fact that cloud computing itself is a relatively new concept—the term was first thought to have been used by Google CEO Eric Schmidt in 2006. So, what is driving this rapid growth?

There is already some adoption of cloud computing: many of us already use cloud computing (mainly for file storage), and enterprises and governments are also using the service. But AI is expected to be the biggest growth driver for cloud computing in the next few years.

AI relies on crunching massive quantities of data, which consumes a lot of computing power. So, the race is on among tech firms to see which of them can best meet this need.

The current frontrunners

Amazon Web Services (AWS) is currently the most dominant force in the cloud computing market, holding a 33 percent market share. The company recently signed new deals with existing customers SAP and Symantec, reportedly worth a combined US$1 billion.

Competition for AWS is heating up, though. Microsoft is its closest competitor, and recent reports indicate that the company is aiming to secure top-level federal security authorizations by 2019.

Huawei is also intent on entering the race and seems to have the means at its disposal to make some significant early headway. The Chinese company announced that for the first time, it will be selling servers powered by its own chips, which it claims are twice as powerful as the nearest competitor. This may indicate that Huawei is serious about securing its position in the cloud computing market.

However, for AI developers, renting computing power is pricey. And while there’s a huge demand, supply isn’t increasing in the same way. This means prices are still going to get higher.

Building their own hardware

While the current big players are using their own existing server infrastructures to service their big clients, others in the race are thinking differently in an attempt to get ahead.

Alibaba is already a significant player in the Chinese cloud computing market. However, the company has now launched its Alibaba Cloud quantum computer, capable of processing 11 quantum bits (qubits). This follows the launch of IBM’s 20 qubit quantum computer at the end of 2017.

Startups are also coming into the mix. Rigetti is a US-based company that has received funding from Andreessen Horowitz and Vy Capital. The startup is aiming to build “the world’s most powerful computers,” launching a quantum-first integrated cloud platform.

While the full benefits of quantum computing are still subject to research, the power of using it could be a considerable differentiation compared to using existing high-power processors.

But building bigger and better machines is an expensive undertaking, and it may not be the only way to meet the need for cloud computing services.

Using untapped computing power

Increasing competition