Amazon’s earnings, released last week dipped far below expert predictions. With AWS generating $8.3 billion this quarter, up 35% from Q2 2018, their rate of growth is starting to slip. While still far outpacing Google Cloud’s $8 billion/year revenue and Microsoft’s $11 billion revenue this quarter, could this dip in growth give the competition a chance to catch up? With Amazon’s power dwindling, is a new cloud leader on the horizon? What will this decrease in growth mean for R&D invested in AWS and Microsoft’s Azure suite in the coming quarter?
Amazon is still growing at an unprecedented rate. The cloud landscape is still highly fragmented, and to see Amazon maintain this level of dominance over the years is very impressive. With the “law of big numbers” 40% growth on $7B is a lot more than 60% growth on $2B, and their growth is nothing to shrug off.
With Amazon still in the lead, we’re not surprised about the effort and traction that Microsoft and Google have been able to secure with their offerings. As the cloud market and the cloud buyer is maturing, so are how different clouds are used for different workloads. Sophisticated buyers know the unique capabilities of each cloud and are levering “best of breed” consumption in multiple clouds. For example, to better leverage available AI capabilities, IT decision-makers are putting specific workloads in GCP. Just a few short years ago, the default answer was to go “all-in” on AWS. Also, Microsoft and Google grabbing market share by becoming much more price competitive, often dropping rates below AWS to secure a new customer. They’ve also upgraded many of their services to better ease adoption, making their offerings much easier to use for new customers.
Microsoft and Google are also more heavily leveraging the channels and marketing to better position themselves with new customers. This is not a surprise as it’s very much a part of the history & DNA of these companies. Microsoft and Google are continuously funding programs and initiatives for their channel partners. As a partner of each, it’s clear that Microsoft and Google are more willing to invest financially and programmatically in their channel partners to ensure joint success in this highly competitive market.
Grant Kirkwood, CTO and Co-Founder of Unitas Global, a leading managed cloud service provider.
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