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Cloud computing spending in the first quarter of 2021 reached $41.8 billion, growing 35% on a year on year basis with Amazon Web Services still in the lead, according to analyst firm Canalys.

There are no surprises in the order of ranking among cloud giants in Canalys' Q1 2021 cloud spending report: Amazon Web Services (AWS) still leads with a 32% share of spending, trailed by Microsoft Azure with 19% and Google Cloud with 7%. Marketshare splits between the three businesses remains unchanged from last quarter.

All cloud giants saw pandemic-driven growth as enterprises accelerated digital transformations, with apps shifting to the cloud as well as data center consolidation.

SEE: Guide to Becoming a Digital Transformation Champion (TechRepublic Premium)

The new figures follow Amazon's Q1 results yesterday, where it revealed it is on target to earn $54 billion this year in revenue with quarterly sales growing 32% year on year. AWS contributed $4.16 billion to Amazon's operating income.

Microsoft this week also reported commercial cloud revenue of $17.7 billion in its Q3 FY 2021, up 33% from a year ago. Azure revenues grew 50%.

Canalys notes that Q1 2020 was the first time spending on cloud exceeded $40 billion and growth did accelerate, albeit at a lower rate than in 2018. Additionally, total spend was nearly US$11 billion higher than a year ago and nearly US$2 billion more than in Q4 2020.

The analyst puts Microsoft's growth down to its investments in the hybrid-cloud software-defined implementation of the control plane Azure Arc, Azure Synapse for data analytics, and AI Platform.

The Azure AI Platform falls within the newly formed Digital Transformation Platform Group at Microsoft.

Meanwhile, Google Cloud reported this week that it raked in $4.047 billion in sales in Q1 2021, growing revenues 46% year on year. Still, it posted an operating loss of $974 million, down from a loss of $1.73 billion in the same quarter last year.

Canalys notes Google Cloud benefited from Google cross-selling Google One consumer storage as well as its focus on industry-specific solutions, machine learning, analytics and data management.

According to Canalys, the growth isn't over either.

"Though 2020 saw large-scale cloud infrastructure spending, most enterprise workloads have not yet transitioned to the cloud," said Canalys research analyst, Blake Murray.

"Migration and cloud spend will continue as customer confidence rises during 2021. Large projects that were postponed last year will resurface, while new use cases will expand the addressable market."

SEE: Back to the office in 2021? Here are ten things that will have changed

Two other factors at play for cloud providers are latency and data sovereignty, which can be addressed by adding more regions. Microsoft is partly tackling demand for these with the Azure Modular Datacenter, or MDC, to help quickly establish infrastructure for 5G, smart cities and edge-computing needs.

Canalys chief analyst, Matthew Ball, noted cloud giants are facing new competition from traditional hardware providers like HPE, Dell, and Lenovo.

"It is not just a contest between the cloud service providers, but also a race with the on-premises infrastructure vendors, such as Dell Technologies, HPE and Lenovo, which have established competitive as-a-service offerings," said Ball.

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Cloud computing spending accelerates again as Microsoft, Google chase AWS - ZDNet