Microsoft hits a milestone, beating out Amazon's cloud in a Morgan Stanley survey of tech execs

• Microsoft Azure passed market-leading Amazon Web Services as the preferred cloud vendor in Morgan Stanley's quarterly survey of technology executives.
• It's the first time since 2018, when the data starts, and the survey bodes well for Microsoft as it tries to close the gap with AWS.
• Meanwhile, though, the coronavirus crisis has become a big test for Microsoft's cloud and the company recently enacted "temporary restrictions" for Azure as it tries to keep up with a surge in demand caused by the crisis.
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Microsoft Azure has surpassed Amazon Web Services as the preferred public cloud vendor in a Morgan Stanley survey of technology executives for the first time since 2018, when its data starts. Morgan Stanley's first-quarter survey of chief information officers is meant as a measure to predict where companies plan to spend their IT budgets.

While Azure only displaced AWS by a small margin - 25% of respondents said they preferred it today versus 22% for Amazon - it's still a milestone for Microsoft, which has long trailed behind market-leader Amazon.

There's reason to believe that the new lead may continue. For the past two years, more of Morgan Stanley's survey respondents said they expected Azure to be their preferred public cloud infrastructure vendor in three years. This year's survey showed the gap widening: 34% of CIOs indicated Azure would be their preferred vendor in three years versus 25% choosing AWS (compared to 25% versus 21%, respectively, in 2019).

Azure was already leading AWS in the platform category, according to the survey.

Microsoft's hybrid cloud - its mix of on-premise and public cloud resources - is the reason Morgan Stanley expects it to have the largest IT budget gain over the next three years, it said in earlier, similar surveys. While Amazon is making gains in the hybrid cloud, Microsoft still "maintains a wide delta against AWS," according to the survey.

The latest survey also found that companies expect to increase their 2020 spend for cloud computing, security, and collaboration tools, and Morgan Stanley expects that a longer-term shift to the cloud will likely accelerate after the crisis.

Coronavirus crisis is testing Microsoft's cloud

Though AWS has had a head-start in building capacity and is still the cloud leader, the survey bodes well for Microsoft as it tries to close the gap. However, the coronavirus crisis has become a big test for Microsoft's cloud and the company seems to be scrambling to keep up.

The surge of people staying home amid the pandemic has led to a big boost in usage of Microsoft's cloud and products such as its Teams chat app, and in recent note to customers posted on its website Microsoft said that it needed to enact "temporary restrictions" on usage to keep up with the demand and keep everything running smoothly.