Amazon, Microsoft Tighten Grip on Enterprise Tech

By Angus Loten 

Amazon.com Inc. and Microsoft Corp. appear to be tightening their grip on the enterprise information-technology market, thanks to a head start in cloud computing and ongoing industry consolidation, according to market-research firm ETR.

Amazon or Microsoft were cited as the preferred vendors in over half of the top 30 products and services listed as information-technology spending intentions by more than 800 chief information officers and other high-level corporate decision makers, the firm said, based on survey results gathered since early March.

The products and services include basic IT needs, such as cloud infrastructure and software, data analytics, robotic process automation, artificial intelligence and other emerging digital tools.

Most survey respondents are from large global firms in a range of industries, U.S. federal agencies and private firms with more than 1,200 employees, the ETR report said.

Thomas DelVecchio, founder and chief executive officer of ETR parent company Aptiviti Inc., said the results show how both Amazon and Microsoft benefited from getting a head start in the cloud market.

Amazon and Microsoft are currently the two largest providers of public cloud services, generating nearly $50 billion a year in combined revenue, an amount that is expected to double by the end of 2020.

"But it's not just that AWS and Azure got to cloud faster," Mr. DelVecchio said, referring to Amazon's and Microsoft's cloud units, respectively. "They've also continually expanded and offered more and more, so that users could find everything they need right there," he added.

He compares the growing allure for CIOs to shopping at a Stop & Shop: "You go to one place and you've got your butcher and your baker and other goods. Why go back to your grocer?"

Not everyone is buying in to the one-stop shop strategy.

Marty Boos, CIO of ticket reseller StubHub, owned by EBay Inc., said he worries that buying more IT products and services from the same provider can lead to vendor lock-in.

"I don't want to work with a hundred vendors, but I am very comfortable with 10 to 15 who can help us innovate and solve business problems," Mr. Boos told CIO Journal.

Amazon last year spent more than $13.6 billion on technology, making it the biggest corporate IT spender in the world, much of it going into servers and other data-center infrastructure aimed at building cloud services to sell to corporate customers, according to International Data Corp. Amazon declined to comment.

Microsoft, the fifth biggest spender, invested $9.2 billion in corporate IT last year, IDC said. Microsoft didn't respond to calls seeking comment.

Competition among all enterprise IT providers is fueling an upturn in industry mergers and acquisitions. Both the value and volume of mergers and acquisitions in the global enterprise-software sector hit a five-year high last year, coupled with steady growth across the IT and business services sector, according to acquisitions advisory firm Hampleton Partners.

Between them, Amazon and Microsoft closed dozens of M&A deals worth billions of dollars in 2018, ranging from Amazon's purchase of video doorbell maker Ring to Microsoft's acquisition of DataSense, a data-management platform for online education services.

That kind of industry consolidation is likely to continue in the years ahead, especially if the economy weakens, said David Mitchell Smith, a vice president and distinguished analysts at Gartner Inc.

While CIOs often claim to prefer shopping around for the best IT products and services, Mr. Smith said "they don't always act that way," adding that it is far easier to get as many tools as you can in the same place.

Write to Angus Loten at [e-mail]

(END) Dow Jones Newswires

March 18, 2019 19:04 ET (23:04 GMT)

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