Here's Who Made Gartner's 2016 Cloud IaaS Magic Quadrant

And Then There Were 10…

Global spending for public cloud is expanding every quarter by roughly 50 percent, and yet Gartner's Magic Quadrant for IaaS keeps shedding vendors.

Only 10 Infrastructure-as-a-Service providers even qualified for ranking among the four quadrants this year, down from 15 in 2015. Those pared from the field were Interoute, Joyent, Verizon Terremark, Dimension Data and CSC.

Consolidation in the industry is even more pronounced when you look at the Leaders' quadrant.

"The market for cloud IaaS has consolidated significantly around two leading service providers," Gartner's latest report stated, referring to Amazon Web Services and Microsoft Azure. "The future of other service providers is increasingly uncertain and customers must carefully manage provider-related risks."

That means enterprise buyers must not only consider costs and services when shopping around for a provider, but also vendors' roadmaps for evolving their strategy and technology.


The Gartner Magic Quadrant ranks cloud vendors on two criteria: Ability to Execute and Completeness of Vision.

Execution is represented on the Y-axis of Gartner's chart, and vision on the X-axis. That lands competitors into one of four quadrants on the chart: Niche Players (low in both criteria), Visionaries (complete vision but lacking execution), Challengers (good execution but lacking vision), and Leaders (excelling in both vision and execution).

Among the 10 providers evaluated this year, all but three were relegated to Niche Player status. Amazon Web Services and Microsoft, once again, were the only providers in the Leaders quadrant, and Google had the Visionaries quadrant all to itself.

Leader: Amazon Web Services

Being first-to-market certainly has its benefits. And Amazon Web Services remains atop the public cloud market by innovating faster than its competitors, maintaining a breakneck pace of feature development.

With a "multiyear competitive advantage over all its competitors," AWS is the reference point for benchmarking the industry. A vibrant AWS Marketplace allows customers to provision thousands of features built by third-party partners.

All that is why "AWS is the provider most commonly chosen for strategic, organization-wide adoption," Gartner noted.

But it's important to remember, according to the researcher, that larger business transformation projects "are best undertaken in conjunction with a [systems integrator]."


Strengths: AWS can boast a diverse base of customers running a broad range of use cases, including hosting of mission-critical applications. And having compute capacity many times larger than all of the other ranked providers combined has helped Amazon recruit more than a thousand technology partners to build out its ecosystem.

Gartner also recognized the contribution of Amazon's channel partners offering managed and professional services.

"That ecosystem, along with AWS's training and certification programs, makes it easier to adopt and operate AWS in a best-practice fashion," the report stated.

While fully mature, AWS remains agile, and offers "the richest array of IaaS and PaaS capabilities."

Cautions: While widely perceived as a cost leader, Amazon "is not eager to be the lowest-cost bidder in a competitive situation," according to Gartner.

And because of a complex granular pricing structure, Gartner recommends customers use third-party cost management tools.

"Less-sophisticated customers may become overwhelmed by the range of possible options," Gartner noted. "Training and third-party assistance are strongly recommended."

Leader: Microsoft Azure

The software giant may be the only true challenger to Amazon Web Services at the moment. But Microsoft still lags behind the industry leader on both axes of the Magic Quadrant—behind only slightly in Completeness of Vision, more so in Ability to Execute.

But Microsoft is throwing everything it's got at building out Azure's technological capabilities and market presence, adeptly leveraging the ubiquity of its products in the corporate data center.

Microsoft's well-known brand and existing customer relationships, combined with experience running consumer Internet properties, deep investments in engineering and an innovative roadmap are the reason "Azure is frequently chosen for strategic adoption by organizations with a strong commitment to Microsoft technologies," Gartner noted.

Microsoft Azure

Strengths: Azure's integrated IaaS and PaaS components "operate and feel like a unified whole."

And Microsoft has been busy rapidly rolling out new features and services in line with a vision of cloud that extends to on-premise Microsoft infrastructure, development tools, middleware and its SaaS application portfolio.

"Microsoft is also becoming more open and less reliant upon its Windows franchise, and Azure's support for Linux and other open-source technologies is improving quickly," the Gartner report stated.

Cautions: Building out its Azure ecosystem is still a work in progress as Microsoft aggressively recruits managed services and professional services partners.

"But many of these partners lack extensive experience with the Azure platform, which can compromise the quality of the solutions they deliver to customers," Gartner noted.

Many of its partners don't take advantage of cloud-native capabilities, reducing the value their customers receive from Azure, the report said.

Visionary: Google

Google was the only 2015 resident of the Visionary quadrant that didn't fall to Niche Provider status this year.

But despite substantial investments over the last year, new leadership in its cloud group, and incomparable technology, Google hasn't yet clawed its way into the Leader quadrant to join archrivals Microsoft and AWS.


Strengths: "Run like Google" makes a great sales pitch. Tapping Google's expertise in running highly scaled, pioneering infrastructure—both hardware and software—is an attractive proposition to customers that's central to the Internet-giant's Google Cloud Platform strategy.

Google has unique vision and experience in developing and managing cloud-native applications. Those use cases are driving GCP adoption.

Cautions: Google's cloud offers solid and well-implemented fundamental capabilities, but not a feature set and scope of services as broad as the two Leaders it hopes to catch. And Google isn't releasing capabilities fast enough to be competitive on that front, Gartner noted.

Google also faces a greater challenge than some of its rivals in wooing enterprise customers.

"Google is still in the rudimentary stages of learning to engage with enterprise and mid-market customers, especially those that are not technology-centric businesses," Gartner noted.

The Internet giant only made incremental progress on the enterprise front in 2015 and still needs to solve challenges involving features, sales, marketing and developing its partner ecosystem.

Niche Player: CenturyLink

Dedicated to advancing an aggressive and evolving cloud strategy in the years since its acquisitions of Tier 3 and Savvis, CenturyLink worked its way up to becoming a major player in the cloud market.

But the CenturyLink Cloud has fallen in Gartner's rankings this year from the Visionary to Niche Player quadrant as the telecom giant faces an increasingly competitive field dominated by fewer players.

CenturyLink's cloud is VMware-virtualized. Through its Marketplace Provider Program, customers can obtain third-party software.


Strengths: CenturyLink has been emphasizing its API-accessible cloud vision, called Platform CenturyLink.

"It has built a solid platform for increasing CenturyLink's own agility and ability to deliver new service offerings," Gartner noted.

At the same time, the telecom is "increasingly signaling the desire to be platform-neutral." That plan includes the possibility of managing other providers' cloud services or a customer's on-premise infrastructure.

Cautions: CenturyLink's cloud might be capable and well-implemented, but it's evolving along a roadmap that "is not sufficiently aggressive for the pace of the market," Gartner noted.

CenturyLink Cloud falls into an awkward position where it's neither a market leader with a broad feature portfolio and abundant MSP partners, nor is it the kind of niche provider that specializes in specific applications or compliance requirements.

Niche Player: IBM SoftLayer

IBM's epic transformation centers around a strategy of becoming a cloud-centric company, and SoftLayer, which has greatly expanded in geographic scope and scale since IBM acquired it, constitutes the IaaS component of that vision.

But while IBM's comprehensive cloud portfolio keeps the storied tech giant near the top of the market, SoftLayer has been slipping in the competitive maelstrom relative to other IaaS providers, and has been downgraded from Visionary to Niche Player by Gartner.

IBM SoftLayer

Strengths: Gartner recognized SoftLayer's long track record as a dedicated hosting provider, including a portfolio unique in the number of bare-metal cloud server configurations and features it offers.

"IBM has a strong brand and existing customer relationships across the globe, and its base of strategic outsourcing customers will help drive a cloud-enabled data center outsourcing business in SoftLayer data centers," Gartner noted.

Cautions: Beyond offering a hybrid blend of virtual machines and bare-metal servers, as well as adding some new storage features and geographic regions, IBM hasn't done much since it purchased SoftLayer in 2013 to significantly advance its feature set.

Niche Player: Rackspace

Rackspace was the first provider to offer customers an OpenStack virtualized cloud—a product it rolled out way back in 2012. But despite diligent efforts in the years since, Rackspace hasn't been able to break out of Niche Player status in recent Gartner reports.

The provider has tried to expand its IaaS reach with VMware and Microsoft-virtualized clouds, as well as a private offering delivering its own OpenStack technologies.


Strengths: Once dubbed the "Open Cloud Company" due to its OpenStack-oriented strategy, Rackspace has returned to its roots as "a company of experts," Gartner noted.

That means again emphasizing its expertise in managed services and customer support, rather than trying to stand on the strength of its IaaS platform.

Gartner commended Rackspace for a "coherent vision of cloud-enabled managed services that utilize automation and a DevOps philosophy, including managing third-party clouds in addition to its own infrastructure."

Cautions: While Rackspace in recent years delivered a solid set of basic features, the company couldn't innovate as fast as the market's leaders or match their sales reach. No longer really trying to compete on that front, Rackspace has been diverting investment into other areas of the business, including managing AWS and Azure.

Gartner noted: "Rackspace may become an attractive acquisition target as its third-party managed cloud services and private cloud IaaS offerings grow in market success."

But if Rackspace remains independent, it will face increasingly fierce competition from large technology and service providers across all of its cloud-related businesses.

Niche Player: NTT Communications

This Japanese telecommunications services giant, part of the NTT Group, significantly revamped its NTT Enterprise Cloud earlier this year and also offers a second IaaS product, Cloudn.

As part of a broad strategic shift in its cloud infrastructure business, NTT's next-generation platforms are combining innovative new technologies—specifically OpenStack and Cloud Foundry—with a hybrid solutions portfolio and advanced networking capabilities.

NTT Communications

Strengths: NTT Communications has a large base of customers, especially in Asia, to sell cloud services to. And its sister companies in the NTT conglomerate can also deliver customers, as well as their partner networks.

"NTT Com also has a long track record in managed hosting and managed security services, and can deliver these solutions in conjunction with Enterprise Cloud," Gartner noted.

The telecom is leaning on that global network to reduce both the total cost of its cloud solutions and friction in its customer implementations.

Cautions: NTT's Enterprise Cloud doesn't do much to differentiate itself in the market. Cloudn has more features for developers, but is missing some desired by enterprise IT. And the two offerings aren't integrated.

"This makes it difficult for NTT Com to serve customers who need a unified offering, or who have cloud-native use cases that require enterprise-class capabilities," Gartner researchers stated.

Niche Player: Virtustream

A perennial Niche Player, this EMC-owned, pure-play cloud vendor focuses on hosting complex, mission-critical enterprise workloads, especially large-scale SAP implementations.

Virtustream has developed its own platform technology to facilitate hosting production workloads—both traditional enterprise and cloud-native applications.


Strengths: Virtustream has carved out a strong niche in providing cloud services for production applications, including those that are mission-critical, such as ERP suites from SAP, Oracle and Microsoft. That's helped the provider win enterprise clients, especially those looking for SAP products complemented by managed services.

Virtustream has also focused its operations on meeting enterprise security and compliance needs, Gartner noted.

The cloud platform technology that Virtustream developed enables fully consistent hybrid cloud solutions.

Cautions: Virtustream isn't the cloud for businesses looking for broad, general-purpose capabilities.

"Although the Dell-EMC merger creates some uncertainties about its future direction, customers should expect Virtustream to continue to focus on its core strengths, rather than expanding into the broad cloud IaaS market," reads Gartner's report.

Niche Player: VMware

VMware's vCloud Air descended into solid Niche Player territory in this year's Magic Quadrant. Last year, vCloud Air just barely straddled the threshold between quadrants on the Visionary side.

VMware's public cloud seeks to capitalize on the company's expertise around virtualization and its dominant position in the private data center, which creates hybrid implementation opportunities.


Strengths: As the market share and thought leader in virtualization, VMware enjoys a broad global base of existing customers "deeply committed to its technologies."

That customer base underlies VMware's public cloud strategy—to provide "hybrid cloud options to existing VMware customers, enabling its channel partners, reinforcing its position in internal data centers and expanding its total addressable market," according to Gartner.

Providing a consistent experience across VMware virtualized infrastructure in the cloud and on premise can be an effective pitch to IT administrators already comfortable with VMware's technology who are looking to expand geographies, add capacity or implement disaster recovery capabilities.

Cautions: VMware's public cloud focus is now entirely on hybrid solutions targeting the company's existing customer base.

Gartner noted that "vCloud Air is now merely one of several ways that VMware intends to address the growing shift toward the use of cloud services."

Other cloud plays involve emphasizing the role of service provider partners using VMware technology and delivering management capabilities for cloud infrastructure running rival virtualization platforms, Gartner said.

Niche Player: Fujitsu

The Japanese tech giant is the IT outsourcing leader in Asia. The company, a Niche Player on the Magic Quadrant, has offered cloud infrastructure services to its global customer base since 2010.

The Fujitsu Cloud IaaS Trusted Public S5 comes as either a multi-tenant service, or single-tenant compute with a multi-tenant back end.

Fujitsu has been rolling out a new platform in 2016, called K5, intended to deliver a consistent service across public cloud, hosted private cloud and outsourced private clouds.

"K5 is part of the foundation for Fujitsu's MetaArc digital business platform, which includes PaaS as well as SaaS capabilities," Gartner noted.


Strengths: As a long-time player in IT services, especially in Asia and Europe, Fujitsu is able to target its cloud sales efforts on a large base of captive customers. The company "has been successful at extending existing Fujitsu relationships into cloud deals," Gartner's report stated.

Gartner also commended Fujitsu for responsive support and good account management.

Fujitsu is developing a portfolio of IaaS, PaaS and SaaS services as part of a vision to encompass a wider range of digital business capabilities.

Cautions: Customers currently using S5 must factor K5 into their buying decisions, even though the new platform has no operational track record.

Fujitsu's cloud IaaS capabilities lag significantly behind those of the market leaders, Gartner noted.

While K5 provides a better foundation, and Fujitsu has made acquisitions to accelerate its time to market, it's going to have to keep aggressively investing in acquiring and building technology if it hopes to remain competitive.