Opportunity knocks for Microsoft’s rivals after Azure direct sale

Microsoft might have created an own goal with its decision to flog off Azure direct.

Beancounters at Canalys think that partner uncertainty around the deal will allow competitors to exploit the opportunity and gain more share in the cloud market.

The analyst predicted that this year would see partners handle an increasing share of the cloud business, particularly in the areas of services, deployment and integration.

Canalys thinks cloud service providers will focus on rewarding those partners with specialist expertise around specific cloud deployments, as well as those that are developing niche services on top of the cloud and those driving customer adoption of cloud.

Canalys chief analyst Alastair Edwards said: “Cloud service providers need to build trust with channel partners and not implement initiatives or change terms and conditions that drive more direct sales. Microsoft is the current dominant force in the channel for cloud services, through the continued expansion of its Cloud Solution Provider programme. But as it offers more direct purchasing options to Azure customers through its new Microsoft Customer Agreement, its partner strategy faces increased scrutiny. This creates an opportunity for rivals to exploit growing uncertainty among Microsoft’s partners.”

The global cloud market saw spending grow 45 percent to exceed $80 billion for the full-year 2018, with Amazon Web Services (AWS) remaining dominant in the space for the fourth quarter, while Microsoft Azure grew 16 percent year on year to retain second place.

Canalys principal analyst Matthew Ball said that cloud infrastructure services drive the core components needed for an organisation’s digital transformation.

“Market dynamics have changed over the last 12 months, with more businesses opting for multi-cloud and hybrid-IT environments to use the strengths of different cloud service providers and deployment models dependent on application and data requirements, compliance, cost and performance”, he said.

Edwards added that cloud vendors are placing greater emphasis on building their channel programmes to support smaller partners who are capturing an increasing amount of SMB clients.

“Canalys expects the share of cloud business handled by or with channel partners to increase in 2019. Cloud service providers must, therefore, find ways to improve their differentiation to partners and raise the maturity of their channel models.”