Amazon, Google: a Battle to Dominate the Cloud

The cloud is just a vast mass of computers connected to the internet, on which people or companies can rent processing power or data storage as they need it.

All the warehouses of servers that run the whole of the internet, all the software used by companies the world over, and all the other IT services companies hire others to provide, or which they provide internally, will be worth some $1.4 trillion in 2014, according to Gartner Research—some six times Google and Amazon’s combined annual revenue last year.

When that time comes, all the world’s business IT needs will be delivered as a service, like electricity; you won’t much care where it was generated, as long as the supply is reliable.

Way back in 2006, Amazon had the foresight to start renting out portions of its own, already substantial cloud—the data centers on which it was running—to startups that wanted to pay for servers by the hour, instead of renting them individually, as was typical at the time. Because Amazon was so early, and so aggressive—it has lowered prices for its cloud services 42 times since first unveiling them, according to the company—it first defined and then swallowed whole the market for cloud computing and storage.

Even though Amazon’s external cloud business is much bigger than Google’s, Google still has the biggest total cloud infrastructure—the most servers and data centers. Tests of Amazon’s and Google’s clouds show that by one measure at least—how fast data is transferred from one virtual computer to another inside the cloud—Google’s cloud is seven to nine times faster than Amazon’s.

The question is, is Amazon’s lead insurmountable?