Microsoft, Amazon, And Salesforce Can Weather A Recession And Coronavirus
In the decade since the Great Recession, cloud computing became the de facto information-technology strategy for small, medium, and big-sized companies alike. Ever since then, the business of renting remote computing power has evolved into a humongous industry, with Amazon, Salesforce, and Microsoft the top players.
Cloud analysts are evaluating how the $265 billion industry will fare as fears of a recession mount with the spread of the novel coronavirus (COVID-19) growing up. The short and crisp answer: fairly well, especially for the market leaders.
John-David Lovelock, the chief forecaster with research and advisory firm Gartner, remarked that nobody is scaling back for a blip among the digital giants. Gartner expects global public cloud-services revenue to increase 33 percent to more than $350 billion by 2022.
There are big reasons to expect cloud computing even in today’s world of a possible severe global recession ahead of us. For instance, Salesforce announced that its revenues were up 43 percent year on year for its third quarter. Salesforce was able to beat the estimates of analysts by hitting $276 million and the market is upbeat about its ambitions of being a $1bn annual revenue company this year.
In practice, companies tend to scale up their cloud usage and rarely scale it back down. They prefer incurring higher cloud-computing bills whether by strategy or neglect instead of upsetting users by constricting capacity.
Today, the primary difference is that there are entire companies running their computing environments in the cloud at unprecedented scales that were previously unthinkable. Moreover, cloud providers provide steep discounts when it comes to multi-year spending commitments that make it even harder for their customers to trim their cloud spending rapidly.
Ajay Dubedi, the CEO and Founder of Cloud Analogy, remarked cash-flow constraints in a recession could actually prompt companies to use more cloud services instead of buying their own information technology equipment. That’s exactly what happened with Salesforce in the Great Recession. In 2009, the cloud-based provider saw revenue grow 21 percent year over year in 2009 while the broader software category shrunk by 3 percent.
There is another factor that is helping cloud computing overpower a possible coronavirus-driven recession ahead of us. It is expected that the demand for cloud-based applications for telecommuting and entertainment could see even more users with more people in self-quarantine to avoid spreading or contracting the illness.
There is no doubt that giants such as Salesforce, Microsoft, and Amazon will weather a coronavirus and recession hands down in the times to come.