The cloud computing market is closing in on a $100 billion milestone, but half of it is going to either Amazon or Microsoft, according to an analyst report

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Microsoft CEO Satya Nadella

• Amazon is still the dominant player in the cloud, with 33% share of the market in the second quarter, according to a new report.
• Amazon and Microsoft are so dominant in this market, they make up for "half of all money spent on cloud infrastructure services," the report said.
• But while MIcrosoft was just a quarter the size of Amazon Web Services in 2016, it is now nearly half the size of its rival.
• The cloud market itself is growing steadily and is nearly at a $100 billion annual run rate.
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Amazon is still the dominant player in the cloud, but Microsoft has been narrowing the gap, an analyst said.

The cloud market, which covers web-based services for infrastructure, platform and hosted private clouds, totaled about $23 billion in the second quarter, according to Synergy Research Group. That's up 39% from the year-ago period and $1.6 billion from the previous quarter.

Amazon owned 33% of that market, bigger than the combined share of its four closest rivals: Microsoft, which had 16%, Google, 8%, Alibaba and Tencent. The report also mentioned other key players in the cloud market - IBM, Salesforce, Oracle and Rackspace - which posted lower growth rates and "are more niche-oriented."

Amazon and Microsoft are so dominant in this market, they make up for "half of all money spent on cloud infrastructure services," the report said. Overall, the cloud market is growing at a steady clip, with overall revenues close to hitting a $100 billion annual run rate, John Dinsdale, Synergy's chief analyst, said in the report.

"There is no end in sight to strong growth," Dinsdale said. "When quarterly spend on cloud services is mapped out for the last twelve quarters, we are pretty much looking at a steep, straight line growth profile."

Microsoft's growth stands out

Dinsdale also said Microsoft's gains in the last three years stand out. "In early 2016 Microsoft was less than a quarter the size of Amazon in this market, while today it is getting close to being half the size," he said.

Microsoft's cloud momentum was underscored in its latest earnings report. The Redmond, Washington-based tech giant said that for the first time revenue for its cloud business, known as Intelligent Cloud, outpaced other major segments that include such flagship products as Windows and Office.

Microsoft's cloud business recorded revenue of $11.4 billion, up 19% from the previous year. An analyst also said Microsoft latest report pointed to an important milestone for the company whose cloud businesses - including Azure, Office 365, LinkedIn, Bing, GitHub, and Xbox Live - are generating as much revenue as its traditional products.

Amazon's cloud business, known as Amazon Web Services, on Thursday also reported a big jump in revenue which totaled $8.38 billion, up 37% from the year-ago quarter. But AWS missed Wall Street estimate for $8.5 billion in revenue, and also posted the lowest quarterly growth in more than 5 years.

The Synergy study follows a new Gartner report that pointed to potential downsides in using AWS, including higher prices, new features that don't work smoothly and Amazon's aggressive sales tactics.

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