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Why you should care about the cloud

Today, Yahoo Finance will live stream Microsoft CEO Satya Nadella’s keynote for the Microsoft Ignite Conference, at 1 p.m. PST/4 p.m. EST.

As my Yahoo Finance colleague Daniel Howley pointed out, 85% of Fortune 500 companies use Microsoft’s Azure cloud service, and the company adds 120,000 new Azure subscriptions a month. Since CEO Satya Nadella took the reins two-and-a-half years ago, the India-born chief executive has run Microsoft (MSFT) based on a company vision that includes what he once called a “critical intersection of mobile and cloud.”

For years, you’ve probably heard about the “cloud”: that vague catch-all tech term referring to data and computing services hosted and crunched remotely.

Why should you care? Consider this: The worldwide cloud services market is projected to grow nearly 17% in 2016 to a total of $204 billion, according to Gartner. More than $1 trillion in IT spending will involve cloud computing services during the next five years.

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Every — yes, every — major tech company is betting big on that shift in some way, shape or form, some longer than others.

Amazon (AMZN) remains the so-called “cloud services platform” to beat with its 10-year-old Amazon Web Services customers such as NASA, Pinterest, Netflix (NFLX) and the CIA. With roughly 30% of the market, AWS is poised to generate $10 billion in revenue this year, according to several analysts.

Microsoft, meanwhile, is a strong second, with roughly 11% of the market captured.

Other entrants are betting big on the cloud, too. Google already has 1 billion-plus people around the world using Gmail as their go-to email service, not to mention hundreds of millions of businesses and individuals creating documents, spreadsheets and presentations via Google Drive.

And Apple’s (AAPL) iCloud service, which hits its 5-year anniversary next month, had well over 782 million users as of February, storing documents, music and photos on its remote servers.

Even Chinese e-commerce giant Alibaba (BABA) thinks it can capture of a big chunk of the cloud market with Alibaba Cloud. Although the cloud computing services provider’s 577,000 paid users pale in comparison to Amazon Web Services’ 1 million-plus, Oppenheimer internet analyst Jason Helfstein wrote in a July report that China’s cloud industry is on the brink of massive growth. Alibaba Cloud revenues are expected to grow 112% annually from just 3% of Alibaba’s overall annual revenues currently to 18% by 2020.

Box CEO Aaron Levie, whose 10-year-old cloud business went public in January 2015, now services over 62,000 companies, including 59% of the Fortune 500. Levie recently told Yahoo Finance he envisioned cloud services, including Box (BOX), powering compelling new use cases in the near-future. Those uses include virtual reality and machine learning that will show the cloud can do much more than merely store your documents, slideshows and photos.

“There are probably going to be 10x the number of cases on the enterprise side, and we’re just at the early stages of seeing where those are,” Levie told Yahoo Finance.

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.

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