Synergy: Microsoft Azure Q3 Revenue up 136 Percent

Microsoft (MSFT) officially earned the No. 2 spot behind Amazon Web Services (AWS) in the infrastructure-as-a-service (IaaS) market earlier this year, and according to the latest quarterly IaaS report from Synergy Research Group, the Redmond company is now showing the strongest year-to-year revenue growth in the biz.

Third-quarter data from the Reno-based research firm shows that Microsoft Azure has the highest growth rate among the leading cloud infrastructure service operators. Azure claimed its No. 2 spot in the spring, and it has only strengthened that spot since.

AWS still has a significantly dominant position, and even Azure is far behind the public cloud giant. But with an annual revenue increase of 136 percent, Azure may have a shot at eventually closing that gap. Synergy noted that Azure now has a 10 percent IaaS market share.

But it’s good news for Amazon, as well. There has been much speculation about its ability to turn a profit, but its revenue increased again after a soft second quarter. Amazon increased its market share back to 27 percent.

Although Amazon Web Services’ growth rate is lower than Microsoft’s, Synergy offered some perspective, noting that “in absolute terms AWS revenue growth over the past four quarters is greater than Microsoft’s total cloud infrastructure revenue over the same period—AWS remains in a league of its own for scale.”

“Given the level of competition in the market, Microsoft’s growth rate has been truly impressive, reflecting a strong corporate focus on cloud and huge ongoing investment levels,” said John Dinsdale, a chief analyst and research director at Synergy Research Group, in a prepared statement. “The other main feature of the Q3 market was the return to strong sequential revenue growth at AWS following a relatively weak second quarter. While prices continue to fall, Q3 did not see the huge pricing disconnect that caused AWS growth rate to falter in Q2.”

For Q3, Synergy also named IBM as the third largest cloud operator. Big Blue currently claims a 7 percent market share.