Hi, it’s Roman from Partner Insight. Welcome back to my newsletter, where I deconstruct winning Cloud GTM strategies and the latest trends in tech partnerships.
Today, we're diving into the transformative impact of AI on cloud marketplaces and how this combination is driving unprecedented value for hyperscalers. We’ll explore the latest insights from Microsoft Build and uncover why the Microsoft marketplace is experiencing a 60% growth in listed solutions. We'll also examine the 141% surge in AI and ML category transactable listings and the staggering 700% increase in visits to solution pages in this category.
Before we dive in, a quick update from the Cloud GTM Leader course: we just launched a new cohort on June 4th, and you can now join the waitlist for the next cohort in September.
Now, let’s explore how AI is accelerating cloud marketplaces and driving growth for the cloud giants.
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Hyperscalers Add $1Tr in Market Cap, as Top SaaS Lose Value
Microsoft, Google and Amazon added 🗽1 trillion dollars in market cap year-to-date, while the top 67 SaaS companies collectively lost >$140 Bn in value.
This stark contrast highlights that hyperscalers are the ones who is truly benefiting from the AI transformation. It also adds yet another reason to take cloud marketplaces seriously.
My analysis YTD (June 3rd):
🔺 Hyperscalers Added $1Tr to its Market Cap
Market cap: $2.14T
Growth (Year-To-Date/YTD): 24.45%
Market cap increase (YTD): $420.4B
Amazon
Market cap: $1.84T
Growth: 18.10%
Market cap increase: $282.0B
Microsoft
Market cap: $3.05T
Growth: 10.84%
Market cap increase: $298.3B
The total market cap increase for Google, Amazon, and Microsoft since January 1, 2024, is a staggering $1 trillion (1000.7Bn).
🔻 Top SaaS Companies Lost >$140 Bn in Value
The best way to compare hyperscaler performance with top SaaS companies is using BVP Nasdaq Emerging Cloud Index (EMCLOUD).
It's calculated and maintained by Nasdaq and sponsored by Bessemer Venture Partners. It includes the weighted average of 67 top SaaS companies with >500M in market cap.
Among them are such iconic names in software as: Adobe, Atlassian, Box, Cloudflare, Confluent, CrowdStrike, DigitalOcean, HubSpot, MongoDB, PayPal, Salesforce, ServiceNow, Shopify, Snowflake, Workday, Zoom, and Zscaler.
EMCLOUD
Total market cap: $1.4 trillion
Growth (YTD): -10.10%
Market cap decrease (YTD): ~$140B
📊 Still More Hyperscalers Grow: Oracle & NVIDIA
To further test the assumption that clouds are the main beneficiaries, let’s take a quick look at Oracle and NVIDIA.
Oracle, added $40 Bn to its market cap YTD.
Nvidia derived 87% of its $26 Bn revenue last quarter from “Data Center” segment. Cloud hyperscalers account for over 50% of their Data Center revenue (more on this in one of my newsletters - link in comments).
Nvidia's jump in market cap YTD is even larger outlier - as if it nearly added another Amazon to its value:
NVIDIA
Market cap: $2.80T
Growth (YTD): 136.21%
Market cap increase (YTD): $1.6T
💡 What Does It Mean for Software Businesses?
The data shows that the AI transformation significantly benefits hyperscalers. Their strategic positioning on the infrastructure layer, their partner ecosystems and their cloud marketplaces allows them to capture immense value from the AI platform shift.
As traditional SaaS companies need to keep pace, it opens questions about the need for strategic alignment with the giants driving the AI r/evolution.
As a result, nearly all companies from the EMCLOUD, including largest ecosystems, like Salesforce, ServiceNow, Shopify, Snowflake, Workday have committed to grow their sales via cloud marketplaces of Microsoft, Amazon, and Google.
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AI Meets Cloud Marketplaces: Parallel Transformation
AI is driving explosive growth in cloud marketplaces, with Microsoft marketplace seeing a 141% increase in the number of listings in AI and ML category and a staggering 700% increase in the visits to solution pages in this category.
This surge reflects broader market trends: businesses need to rapidly embrace AI, and they're increasingly using cloud marketplaces to deploy and discover AI and software solutions.
All of this drives 6 million consumers to visit Microsoft marketplace monthly.
The AI-fication of the Technology Stack
At the recent Microsoft Build conference, Anthony Joseph, VP, Microsoft Cloud Marketplace & ISV Journey, explained three key reasons why its cloud marketplace is experiencing impressive acceleration:
“We've committed like we haven't in the past in building capabilities, functionality that make it easier for partners to build their products and deploy them on the marketplace. Customers also are finding it easy to discover and deploy items on the marketplace. And then, obviously, there's the massive development in the last year that no one will be surprised about, which is AI.”
Joseph compared the new wave of AI transformation with the previous wave of cloud adoption, calling it the “AI-fication of the stack.” With its investments in the cloud marketplace and AI, Microsoft positions its marketplace at the center of this major transition.
“We're now looking at what I would call the AI-fication of the stack. Which is you can come to Microsoft Cloud and come to our marketplace, and whether it's - infrastructure solutions that give you access to GPUs to build your AI applications, - or it's plugins that allow you to develop your applications to extend Copilot - or create a Teams app that actually plugs into our Teams ecosystem, we have a broad cross-section of capability for you to connect to.”
The Marketplace as an Extension of the Tech Stack
Microsoft's vision is ambitious. It aims to build a complete AI stack, viewing its commercial marketplace as an integral extension of this vision.
As Yvonne Muench, Senior Director at Microsoft, described at the Build conference:
“You heard Satya say our goal as a company is to build that complete AI stack to power the applications that you want to build. And you can think of marketplace as an extension of that technology stack. So the tech platform to build apps and power anything that you choose to build. And then the commerce platform to discover or buy or sell the applications. So that simplifies and streamlines commerce for buyers and sellers.”
Some studies show that by next year, over 90% of new enterprise applications will have AI embedded. This creates a massive growth opportunity for marketplaces.
Muench highlighted that we shouldn't think of marketplaces as just the buying and selling of finished SaaS applications. That is a huge part of it, and that's important.
But even for developers not choosing to monetize their apps, the marketplace is an extension of the technology platform. It provides access not just to SaaS applications, but also to tools, platforms, LLM models, and data. These resources help power, extend, and accelerate the applications being built.
Marketplace: The Parallel Shift
But there's more. Beyond the AI-driven shift to build smarter applications, a marketplace transformation is redefining how these applications are discovered and transacted.
“We've talked a lot at Build about the AI era creating a transformation in how apps are built and the capabilities of what those apps can do," highlighted Muench. "And there's actually a parallel transformation in how applications are discovered, bought, and sold. So that is a powerful shift towards digital platforms that enterprises are preferring as a way to discover, try, and buy applications.”
Cloud marketplace now enables multiple buying patterns. From a simple unassisted purchase, where the customer self-serves and figures out what they need, to the most complex sales. Cloud marketplace now includes customized pricing, negotiated terms, and long sales cycles that many didn’t realize marketplaces could support.
Expanding Platform Reach: Three Pillars of Microsoft Marketplace
Marketplace continues driving Microsoft's transformation into a platform.
When companies publish their applications on its cloud marketplace this makes them part of the marketplace catalog. This catalog appears in various endpoints, such as Azure Marketplace and AppSource for business users. Customers can browse this catalog to find what they need.
Importantly, applications in that catalog can be surfaced directly into Microsoft products where customers are working daily. This includes productivity workers using Microsoft Teams, developers using the Azure Portal or Azure AI Studio, and many more. This seamless integration could be a game-changer.
Internally, the same catalog is used by Microsoft sellers and channel partners. This enables them to offer holistic solutions by selling Microsoft first-party and third-party applications side by side.
These three components - broad exposure, seamless integration, and internal sales support - explain the commercial marketplace's strength and growth drivers.
Benefits for Developers and Sellers
Within its cloud marketplace, Microsoft is witnessing a “high degree of momentum” in the AI and ML category.
"We've seen a 141% increase in the number of listings in this category," they noted. "And we're seeing over 700% increase in the visits to those solution pages in the AI and ML category. So that is really good news for the publishers in those categories."
For developers, the marketplace offers three main benefits. First, access to a central catalog of applications that support their development needs. Second, the ability to try, test, and proof these apps before committing to a purchase. Third, faster innovation and deployment thanks to simple integration within Azure.
Sellers enjoy an even longer list of benefits.
Microsoft's marketplace is designed to help them reach a global audience, grow their business, and increase sales. The "publish once and sell globally" concept simplifies the selling process.
Ease of procurement is another advantage. Many customers are already set up in Microsoft's procurement systems, making it easy for them to purchase third party applications via the marketplace.
Complex deals are also supported. Flexible pricing options, including long-term multi-year pricing, custom deal making through private offers, and tapping into end customers' committed cloud budgets are all part of the mix. The latter has been a powerful accelerant, as we discussed in this newsletter before.
Finally, Microsoft is infusing AI into the marketplace experience, enhancing it for both publishers and customers - more on this below.
Triple-Digit Growth: Marketplace Success Stories
Anthony Joseph, VP, Microsoft Cloud Marketplace & ISV Journey, highlighted the marketplace success stories:
“UiPath and Pinecone - they're two of our ISVs that have developed on the marketplace AI apps that they've launched. And one of them has launched an app six months ago, and now they have customers from over 60 countries worldwide.”
Pinecone’s journey is insightful.
In just six months on the marketplace, they've seen a high number of customers sign up globally. This includes enterprises who are leveraging marketplaces to quickly sign up and negotiate private offers. The marketplace strategy aligns perfectly with Pinecone’s goals, driving PLG organic growth and customer success.
“We even have a Pinecone customer purchased through Azure Marketplace,” they highlighted that some of their existing customers also prefer to renew via the cloud marketplace.
UiPath Marketplace Triple-Digit Growth
UiPath’s marketplace journey began in 2019. Initially, they had to sell the idea internally, convincing stakeholders of its potential. Over time, their vision became reality.
They have published several solutions on the marketplace. Then they moved to private offers. Now, they’re working on multi-party private offers. “We are allowing partners to play a role in that sales process,” they explained.
The results are impressive.
With triple-digit growth year over year, the investment is paying off. Customers appreciate leveraging their cloud committed spend they have with Microsoft, which helps with budgeting. Procurement teams love managing all IT-related vendors in one place - renewals and costs are visible, simplifying vendor management.
“Our partners are excited to transact with us on the marketplace, taking margin, adding services, and delivering a full solution to the end customer.” - highlighted Riley O'Brien Wolff, Sr. Director Global Technology Alliances from UiPath.
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AI Boosts Microsoft Marketplace Growth
With the listings on Microsoft marketplace 🔺60%, it was only a matter of time before AI acceleration came into play. Now it’s here.
Let’s look at the latest marketplace insights from MSFT Build.
Microsoft emphasized that it “continues to invest in the marketplace as the primary channel to connect customers to our robust partner network so that they can solve virtually any business or technology challenge.”
These investments are paying off:
“This year, we've seen a 60% increase in solutions listed in our marketplace catalog”
With 95% of Fortune 500 companies running on Microsoft Azure (at least some workflows), the “majority are using the marketplace” to manage their cloud estates.
⚡ AI-Powered E-Commerce: A Marketplace Game Changer?
Microsoft leverages AI to boost its Marketplace in these key areas:
Infusing AI into the marketplace to accelerate and simplify commerce
Helping partners build AI-powered solutions with the right tools and sell them via its marketplace
Enabling customers to buy AI solutions smarter, with 100% of eligible marketplace purchases counting towards their 💲 Azure cloud consumption commits
For customers, the marketplace helps connect to Microsoft's extensive partner network and find, try, buy, and deploy solutions quickly, easily, and safely.
For partners, growth is a top priority, so the marketplace helps them reach more customers globally. Whether directly online, through the MSFT partner ecosystem, or co-selling with thousands of MSFT's field sellers.
📈 Marketplace AI Roadmap: Build, Publish & Get Discovered
🛠️ Build
The MSFT marketplace supports a range of AI solutions, including AI-enabled SaaS, co-pilot extensions, AI-enabled Teams apps, ML models.
Using Co-Pilot Studio, partners can surface their data and services into Microsoft co-pilots or create their own co-pilots.
Partners can also take full control and build their own end-to-end experiences using tools like Azure AI Studio.
The marketplace is how companies can take these AI solutions to market globally.
🛒 Publish
Microsoft has announced a new Co-Pilot for partners to simplify their publishing into the marketplace. This co-pilot uses natural language to assist in creating SaaS offers, configuring them for transactability, and even creating Private Offers. It will also help with publishing questions and challenges.
🎯 Get Discovered with AI
The AI-powered solution discovery is now live in MSFT marketplace, helping customers make better decisions while exploring. It provides a list of solutions and suggests relevant documentation and best practices.
MSFT also announced “Solutions Partner with Certified Software,” designation to highlight solutions and AI products interoperable with its cloud.
The AI acceleration of Cloud GTM is real, but how it will impact your strategy?
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📈 Accelerate your Growth in Cloud Marketplaces
Transform your marketplace strategy with first-hand insights from Cloud GTM leaders in our 5-week cohort course. Learn in a community of great alliance leaders. Join 100+ alums from companies like GitLab, Darktrace, IDC and others.
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