AWS hits $6.7bn in quarterly revenue – as the biggest cloud infrastructure players get even bigger

Amazon Web Services (AWS) hit almost $6.7 billion (£5.2bn) in revenues for its most recent quarter – up almost 10% from the previous quarter and marking a 45% jump from this time last year.

Despite Amazon’s overall figures being a slight disappointment for investors and analysts – shares dipped in after-hours trading after total quarterly revenues of $56.6bn missed the $57.1bn target – AWS continues to reach new heights.

Of particular interest is the operating income statistic. AWS profit broke $2bn for the most recent quarter. This represents more than half of Amazon’s overall profit of $3.7bn. Net income was $2.8bn.

Responding to an analyst question around AWS’ improvements, Brian Olsavsky, chief financial officer, noted the operating margin. “A lot of that is based on effiencies of our data centres,” he said, “not only for the AWS business [but] also for our Amazon consumer businesses, who is AWS’ biggest customer.”

AWS got a mere 27 mentions in total among Amazon’s company highlights. These included partnerships with Accenture and Capgemini announced in September, while on the customer side Samsung Heavy Industries was announced in August to help bring shipbuilding into the cloud. AWS also announced earlier this month it was to launch its first African data centre, putting it in line with Microsoft. One eye is on re:Invent, which kicks off in Las Vegas a month today, so expect a little bit of stockpiling between now and then  – this reporter is particularly interested in what comes out with regards to conversational programming, for instance.

So, as the final quarterly reveal of 2018 – albeit with some companies beginning to classify their 2019 financial year – how does this compare with the other major cloud infrastructure players? Alphabet announced total revenues of $33.7bn for its most recent quarter, up 21% from this time last year. While the company does not break out its specific cloud figures, ‘other revenues’, of which Google Cloud is a part, hit $4.64bn, up almost 30% from the previous year’s equivalent.

In the subsequent analyst call, Google CEO Sundar Pichai cited security and AI as key facets to the company’s cloud growth. This publication has noted both of these areas within Google’s overall strategy; while the company’s pre-packaged AI services, launched in August, were ahead of the pack, the rollout of its managed cloud-hosted hardware security module (HSM) a week after was necessary to keep in check with AWS and Azure.

Earlier this month, former Google Cloud product management lead Amir Hermelin took to Medium in a farewell post to bemoan what he saw as the company’s two major strategic errors when it was pushing through its cloud vision. Hermelin said the company spent too long analysing AWS’ and Azure’s moves, as well as underestimating the value of the enterprise market. Infiltrating machine learning into all aspects of its cloud story with the aim of being a clear market leader in the former, Hermelin added, was much more like it.

Microsoft, as this publication put it yesterday, has a message which barely changes from quarter to quarter. The figures simply went up; a 76% rise in Azure revenue year over year, and its two primary revenue buckets which consider cloud initiatives – productivity and business processes and intelligent cloud – going up 19% and 24% year on year respectively. Total quarterly revenue, of $29.1 billion, was a 19% yearly increase.

Ultimately, the market keeps getting bigger and the leading players all continue to increase their market share. Synergy Research, an analyst firm which has long since covered the infrastructure market, puts Amazon at holding just over one third (34%) of the market right now, well ahead of Microsoft (14%), who made significant gains, IBM and Google (both 7%), and Alibaba (4%).

The question is: how long can this go on for? John Dinsdale, a chief analyst at Synergy, noted year-on-year growth rate dropping slightly – yet this is not a major surprise given the scale of the market today. “The growth rates are tailing off at some of the leading cloud providers but that is just the law of large numbers kicking in,” said Dinsdale. “You cannot keep on growing at 100% when you reach massive scale.”

You can read Amazon’s full financial results here and Alphabet’s here.

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