Growth Slows for Cloud Giants AWS, GCP, Microsoft Azure
Cloud service revenues are nonetheless rising at a quick tempo after many organizations accelerated their digital transformation plans as a result of pandemic. However, that accelerated tempo could also be slowing a bit as CIOs take a look at inflation and recessionary indicators, no less than in the event you choose by the quarterly earnings introduced by three of the large cloud suppliers final week — Amazon Web Services, Google Cloud Platform, and Microsoft Azure.
Keep in thoughts, these cloud suppliers are nonetheless rising at a quick tempo, simply not fairly as quick as they’d been. For occasion, Amazon said that income from its cloud phase rose 33% within the second quarter over the earlier quarter. But that fee of development was slower than the 37% development fee reported within the earlier quarter.
AWS
On Amazon’s earnings name an analyst requested a couple of slowdown in cloud reserving charges. Amazon’s CFO Brian Olsavsky acknowledged macroeconomic considerations however repeated the worth proposition public cloud has over personal information heart spending.
“When you’re trying to launch a new product or service, you have to face building your own data center and getting capital for a data center and building it yourself or moving to the cloud and essentially buying incremental infrastructure capacity,” he mentioned. “Then cloud computing really shows its value.”
Microsoft Azure
Meanwhile, Microsoft reported that its revenues from Azure and different cloud providers grew by 40% for the newest quarter over the earlier quarter. That in comparison with a development fee of 46% for the earlier quarter.
Microsoft CEO Satya Nadella informed analysts on his firm’s earnings name that Azure’s efficiency was impacted by companies attempting to cope with the macroeconomic scenario by attempting to do extra with much less, and that Microsoft was attempting to assist them try this.
“For example, moving to the cloud is the best way to shape your spend with demand uncertainty, right, because in fact, if anything, one of the things we’re seeing is an increased shift towards the cloud, and then of course, optimizing your bill,” he mentioned. “We are incenting even our own field to ensure that the bills for our customers come down. And that, in fact, even shows up in some of the volatility in our Azure numbers, because that’s one of the big benefits of the public cloud…Coming out of this macroeconomic crisis, the public cloud will be even a bigger winner because it does act as that deflationary force.”
GCP
Google Cloud Platform noticed a 35% development in income for its cloud unit over the earlier quarter, however that development fee was decrease than the 44% development fee loved by the corporate within the first quarter. When requested by an analyst throughout its earnings name if Google Cloud Platform was seeing a slowdown and pullback by prospects, Alphabet and Google CEO Sundar Pichai was optimistic, however tempered his feedback with an acknowledgment of the macroeconomic elements.
“On cloud, we continue to see strong momentum, substantial market opportunity here, and it feels like early stages of this transformation,” he mentioned. He added that he’s all the time in conversations with prospects of all sizes who’re simply starting their cloud journey, indicating the large alternatives forward. That mentioned, some prospects could also be feeling different financial pressures.
“You do see a varying mix of some customers impacted in their ability to spend,” he mentioned. “Some customers just taking longer times. And maybe in some cases thinking about the term for which they’re booking and so on. But I don’t necessarily view it as a longer-term trend as much as working through the macro uncertainty that everyone is dealing with.”
A June 2022 Gartner report ranked public cloud suppliers and mentioned the market grew by 41.4% in 2021 to complete $90.9 billion. In 2021 the highest 5 IaaS suppliers accounted for over 80% of the market. Amazon continued to steer the worldwide IaaS market with 38.9% market share adopted by Microsoft with 21.1% market share. Alibaba was third with 9.5% market share and Google was fourth with 7.1% market share. Huawei rounded out the highest 5 with 4.6% market share.
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