Tech Market Update: Capturing Opportunity In The Cloud

Over the past year, the pace of growth in developed economies has slowed, and there has been some talk about economic dark clouds gathering on the horizon. But there are in fact strong areas of innovation which paint a different picture - one of optimistic growth. A good example is the area of cloud computing.

Today there are 20 billion devices that are connected to the internet. Your personal computer, smartphone or tablet make up only 5 billion of these, the vast majority is made up of devices used by big businesses. Side by side with this proliferation of devices comes a whole lot of information. Just think of all those videos on YouTube, movies on Netflix and pictures on Facebook. They must be stored somewhere - no one wants a bulky phone in their pocket and many businesses do not want to maintain a server in their office. This is the story of the demand for storage.

Now here is another story. Amazon was one of the first companies to operate on the scale that the reach of the internet made possible. Back in the early 2000s they discovered the need for an efficient way to store, manage and communicate information for all their business partners. They created a data warehouse that did all three of these things. Little did they realise that they were sitting on a goldmine.

This data warehouse they created is what is now known as Amazon Web Services or more generically “the cloud”. Through this service, Amazon rents out their computing power to all manner of needs. Sales from cloud computing grew by 50% in 2018 to almost US$8b. This was driven by the demand from businesses who find that renting their storage and computing requirements can be simpler and more cost effective than managing things inhouse.
Today, Amazon is the leader in cloud computing, Microsoft is number two and Google’s parent company Alphabet is number three.

Of all the data on the internet, 90% has been created in the last two years alone, and this is only going to increase going forward. Cloud storage is a key enabler of this data revolution and is certainly a bright spot helping drive new and exciting technological innovation in the years to come.

Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs.  Any opinions contained in it are held as at the report date and are subject to change without notice.