Growth Slows for Cloud Giants AWS, GCP, Microsoft Azure

Cloud service revenues are still growing at a fast pace after many organizations accelerated their digital transformation plans due to the pandemic. However, that accelerated pace may be slowing a bit as CIOs look at inflation and recessionary indicators, at least if you judge Keep in mind, these cloud providers are still growing at a fast pace, just not quite as fast as they had been. For instance, Amazon said that revenue from its cloud segment rose 33% in the second quarter over the previous quarter. But that rate of growth was slower than the 37% growth rate reported in the previous quarter.

AWS

On Amazon’s earnings call an analyst asked about a slowdown in cloud booking rates. Amazon’s CFO Brian Olsavsky acknowledged macroeconomic concerns but repeated the value proposition public cloud has over private data center 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 said. “Then cloud computing really shows its value.”

Microsoft Azure

Meanwhile, Microsoft reported that its revenues from Azure and other cloud services grew Microsoft CEO Satya Nadella told analysts on his company’s earnings call that Azure’s performance was impacted “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 said. “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 saw a 35% growth in revenue for its cloud unit over the previous quarter, but that growth rate was lower than the 44% growth rate enjoyed “On cloud, we continue to see strong momentum, substantial market opportunity here, and it feels like early stages of this transformation,” he said. He added that he is always in conversations with customers of all sizes who are just beginning their cloud journey, indicating the big opportunities ahead. That said, some customers may be feeling other economic pressures.

“You do see a varying mix of some customers impacted in their ability to spend,” he said. “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 providers and said the market grew Special Report: How Fragile is the Cloud, Really?

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