Why Google and Microsoft shouldn't be worried about losing $50 billion Salesforce to Amazon (CRM, AMZN)

Richard West/Flickr

Google and Microsoft both lost out on a marquee customer last week, when Amazon Web Services snagged a $400 million partnership deal with Salesforce.

But Wall Street doesn't think it's a big loss for the two cloud vendors, both of which are playing catch up to Amazon. Rather, the deal is a taste of bigger things to come for the entire public cloud service industry. 

"We hardly believe this serves as a death blow to competing public clouds, like Microsoft's Azure, but rather an acknowledgment that public cloud infrastructure utilization is the wave of the future, even for leading SaaS vendors," financial research firm Stifel wrote in a note to investors last week.

Stifel's note underscores the massive shift to public cloud services that we're seeing across all industries. A growing number of companies are expanding their use of public cloud services, as opposed to running things in their own data centers, and Salesforce's deal with AWS highlights this trend. Even customers like financial services firm Capital One, which operate in highly regulated industries, are making the move over to the public cloud.

In fact, according to a survey by Cowen & Co. last week, companies currently store 24% of their workload in the public cloud on average, with the use rate expected to grow to 32% by 2021. A recent report by IDC showed this trend more clearly, saying public cloud spending will jump meaningfully at the expense of traditional IT infrastructure costs over the next few years.

Richard West/Flickr

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