Here's another sign that Amazon's $7 billion cloud business is crushing its competition

Amazon drives most of its revenue from its online retail segment, but there’s a growing side of its business that’s absolutely crushing its competition: Amazon Web Services.

According to the annual “Private SaaS Company Survey” run by Pacific Crest, AWS owns 40% of the server market for small and medium sized app companies.

Its main competitors, Salesforce1 and Microsoft Azure, each took only 5% and 3% of the market, respectively, with about 37% saying they’re still managing their own servers (instead of running apps on public cloud servers).

On top of that, the result showed that the number of companies using AWS will keep growing 3 years from now, up to 44% of the market, while self-managed servers will see a slight drop in its usage.

Also worth noting is the fact that more people are turning to the cloud: 52% of the respondents said they didn’t use public cloud servers last year, but that number went down to 37% this year.

One caveat is that the survey only asked 280 companies with a median revenue size of $US4 million. Most of them generated less than $US100 million in annual sales and had no more than 500 employees, indicating the survey doesn’t reflect the broader large enterprise market.

But these results are in-line with what we’ve been seeing with AWS’s growth in recent years. Last quarter alone, AWS made $US1.8 billion in revenue and is on pace to hit $US7.3 billion in annual revenue this year, according to AWS SVP Andy Jassy. It’s also been signing up larger enterprises, such as GE, Boeing, and Netflix lately, moving beyond the startup and SMB market.

We’ll get an update to AWS’s business on Thursday when Amazon reports its third quarter earnings.

You can read the full Pacific Crest report here.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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