2020 preview: Microsoft and Google chase Amazon in cloud sector

Amazon and Microsoft will continue to battle for the Pentagon's $10 billion JEDI cloud contract in 2020, but it will be a banner year for most of the cloud providers. (Pixabay)

Amazon Web Services' commanding lead in the cloud sector seems insurmountable, but expect Microsoft, Google and other providers to keep chipping away in 2020.

The U.S. Defense Department's decision to award Microsoft the 10-year, $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud contract in 2019 will continue be hotly contested in 2020. In December, Amazon, which had been viewed as the front runner for the contract, filed a notice in the U.S. Court of Federal Claims, saying it planned to contest the Pentagon's decision to give Microsoft the cloud-computing contract.

RELATED: Amazon blames President Trump for loss of $10B JEDI contract

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When the decision was first announced on Oct. 25, Amazon said in a statement that it was "the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly led to a different conclusion. Despite the Pentagon's denial, Amazon complained in its filing that President Donald Trump's dislike of Amazon and Washington Post owner Jeff Bezos was the reason that Microsoft landed the JEDI contract.

The JEDI contract has been a mess ever since it was first announced two years ago, which included Oracle and IBM complaining the process was unfair in several court cases after they were dropped from contention.

Regardless of whether Microsoft keeps the contract—it doesn't seem likely that it will be overturned—2020 will be yet another banner year for the large hyperscale cloud providers

Microsoft and Google spent 2019 investing heavily in new technologies, such as Kubernetes for Microsoft, as well as building out new data centers to keep pace with the capacity demand. IBM Cloud, Oracle and Alibaba Cloud have also made their marks in the public, private or hybrid cloud sectors.

While Amazon Microsoft and Google dominate the top end of the market, there are numerous revenue opportunities for the smaller players at the regional or national levels both here and abroad.

Last year saw a bit of a lull in capex spending by some of the hyperscale providers, which also includes Facebook, Apple and Netflix. This impacted the bottom lines of some vendors such as Arista Networks. With more 400G deployments in 2020, vendors should be back in the good graces of the cloud providers' budgets.

RELATED: CenturyLink draws up its playbook for edge compute services

Distributed cloud, in combination with network edge compute, will also be big in 2020. Service providers, such as Verizon and CenturyLink, are bringing cloud computing to the edge to make it easier for developers to create and deploy low-latency applications for 5G, IoT and autonomous vehicles.

Lastly, expect SD-WAN vendors to continue to develop closer relationships with cloud providers in order to offer cloud-based software-as-a-service (SaaS) applications, such as Office 365, from the cloud without the need to go to a data center during the round trip.

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