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International Business Machines Corp Just Trounced Amazon.com and Microsoft in This Cloud Matchup

By Tim Brugger - Dec 6, 2015 at 12:35PM

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Big Blue’s cloud solution went head-to-head with the industry’s biggest players, and proceeded to leave them in the dust.

By most accounts, the cloud is expected to blossom into a $100 billion-plus industry in the immediate future, and continue to climb as more individuals and enterprises shift their data hosting and analytics needs offsite. Not surprisingly, tech behemoths like IBM ( IBM 1.66% ) recognize the opportunity the cloud offers, and have slowly but surely started shifting resources to ride the cloud train.

Of course, IBM is hardly alone in offering a bevy of cloud solutions. With so much potential revenue at stake, folks like Amazon.com ( AMZN -1.38% ) via its Amazon Web Services (AWS) unit -- recognized as one of the industry's first providers -- and fast-growing Microsoft ( MSFT -1.97% ) are betting big on the cloud. But market share aside, which of the cloud leaders actually offers the best-performing solution? According to a recent, independent study, Amazon.com and Microsoft both take backseats to IBM.

Photo source: IBM.

Survey says
Niche cloud platform provider VoltDB contracted with an independent research firm to measure the performance and relative cost of the cloud industry's biggest players. The objective of the study was two-fold: one, determine which of the cloud kings offered the most operations per second. Second, compare the relative cost for each operation performed. Not only did IBM's SoftLayer bare metal platform win the day -- it turns out it wasn't even close.

Bare metal cloud platforms are often the alternative of choice for large-scale enterprises, rather than more individualized, full-service solutions, including IBM's SoftLayer Virtual offering. As per the study, IBM's bare metal SoftLayer platform led the charge, delivering over 1.5 million operations per second. Microsoft's Azure and Amazon.com's AWS platforms? Just 902,017 and 585,000 operations per second, respectively.

Based strictly on performance, the study found IBM is head-and-shoulders above Amazon.com and Microsoft, the recognized leaders in annual cloud revenue. But what does all that data analytics capability cost? On a dollar-per-operation basis, IBM once again does more than hold its own. In fact, the disparity is even greater on a relative cost basis.

For each dollar spent on IBM's SoftLayer bare metal cloud platform, its customers enjoy 4.63 billion operations, the survey said. That's a lot of bang for the buck, particularly compared to other cloud providers. Amazon.com's AWS customers get about a third fewer operations for each dollar spent, and Microsoft about a tenth. It should be noted that the configuration options of Microsoft's Azure platform limited its results as they relate to the industry benchmark used for the performance study, so it wasn't quite an apples-to-apples comparison -- but telling nonetheless.

What's the big deal?
Of course, developing the fastest, most reasonably priced alternative hardly guarantees success in any industry and IBM has a long road ahead to catch the Amazon.coms and Microsofts of the cloud world where it counts for investors: revenue.

The $4.5 billion annual run rate IBM's cloud unit delivered in Q3 was a nearly 50% improvement over the year-ago period's $3.1 billion. That's the good news. The not-as-good news for IBM is that Amazon.com delivered $2.1 billion in revenue from its AWS division in Q3 alone, which puts it neck-and-neck with the $8.2 billion annual run rate Microsoft announced last quarter.

That said, owning the fastest, most cost-effective solution is a testament to IBM's emphasis on analytics and cognitive computing delivered via the cloud. Though not all industry pundits are enamored with IBM's investment of time, money, and personnel in its Watson cognitive computing wonder, its focus on actually utilizing the reams of data housed in the cloud -- not just storing it -- is what separates IBM from the Amazon.coms of the world.

Delivering actionable results based on analytics is where the majority of future cloud growth will come from, and as the VoltDB performance testing indicates, IBM is leading the charge.

 
 
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$118.84 (1.66%) $1.94
Microsoft Corporation Stock Quote
Microsoft Corporation
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Amazon.com, Inc. Stock Quote
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