Cloud computing revenue jumps, led by Microsoft and IBM

The virtue of fear as a source of animating energy has long been recognized in the quicksilver tech industry.

The fear factor is clearly at work now in the fast-growing market for cloud computing. The latest quarterly reports from technology companies and market research show that two of the fastest movers in the emergent cloud business are the incumbent giants of traditional software, Microsoft and IBM. Their business is most at risk from the shift to computing delivered over the Internet from distant data centers, with the business model of a pay-for-use service rather than a product.

Microsoft's cloud revenue jumped 164 percent in the second quarter, while IBM's surged 86 percent, according to a report last week by the Synergy Research Group. Amazon is still way ahead, with $962 million in cloud revenue, compared with $370 million for Microsoft, and IBM's $259 million, Synergy estimates. But Amazon's growth rate, at 49 percent, was only slightly ahead of the torrid 45 percent pace of the cloud market as a whole.

The progress by Microsoft and IBM was emphasized in the companies' quarterly financial reports and conference calls with analysts.

"It's not just talk — they are backing it up with a lot of investment," said John Dinsdale, an analyst at Synergy.

In a report by technology research firm Gartner last year on basic cloud services, IBM was among the niche players (and in 2012, it wasn't even included as a player at all). This year, helped by the acquisition of SoftLayer, a cloud start-up, and its own internal investment, the vision is strong, but the execution still lags a bit. Microsoft has become a leader. Last year, Gartner predicted Microsoft about where IBM is this year.