AWS may have had seven years of its beginnings in the cloud, but now it has real competition. Why is that a good thing.
Boom. Boom. Boom. That’s the sound of Google (Alphabet), Microsoft and Amazon reporting their earnings for the past week, and especially their cloud earnings, all of which are huge. If I had to answer, I would just write “there is a huge amount of money being spent on cloud computing.” Or maybe I’ll just come Jordan Novet Excellence Ranking, which shows the relative growth of major cloud providers over time. Some people might look at all this money in the cloud and think, “This can’t be good for AWS,” because the once undisputed cloud leader has real competition right now.
But the fact that other clouds are doing well is actually good for AWS, not bad. Here’s why.
Big and getting bigger
First, the numbers. Well, that’s close to the numbers we can get, because only AWS has an explicit revenue share. To be fair, this is not entirely true. While Microsoft and Google reduce their cloud revenue with things like Office 365 and Google Apps revenue, AWS also includes such revenue in its overall figure…but relatively little to obfuscate the total. number. It’s not exactly the fault of Microsoft and Google that they have other significant sources of cloud revenue, although arguably it is their fault that they have delayed investing in infrastructure as a service, for AWS several years to build momentum.
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At any rate, the numbers. They are big.
- AWS generated $18.4 billion in revenue (quarterly), up 37% to $74 billion;
- Microsoft’s Intelligent Cloud segment, which includes Azure, SQL Server, Windows Server, and enterprise services, posted revenue of $19.05 billion, of which Azure grew 46% (no idea how fast it runs). because Microsoft doesn’t break Azure and some of the cloud services don’t seem to be all clouds like Windows Server…); and
- Google Cloud (including Google Workspace) earned $5.82 billion in cloud revenue, up 44% to $23 billion.
AWS tends not to provide much detail in its earnings calls, though it did say it spent about $24 billion in capital spending “primarily” on AWS (think: data centers) . Charles Fitzgerald keep tabs CapEx spends in the cloud, and let’s say each of the big three is spending “a lot”. AWS also reported that long-term contracts for AWS grew 66%, bringing in a balance of $88.9 billion. Meanwhile, Microsoft CEO Satya Nadella is pleased to announce that $100 million worth of Azure deals more than doubled that quarter. (Of course, this could mean there was one transaction but now there are two, or maybe there are 10 and now 20. No details provided.) Google, this time, doesn’t add much color to its cloud earnings.
Big numbers, all around and spend a bunch of cash to keep that cash flowing.
But I said back in 2019: however we might want to maintain today’s cloud revenue or market share score, the real focus should be on the future. The public cloud remains a falling point in the ocean of IT spending: around 6% of the overall pie. It’s growing, yes, and growing fast, double yes. But most IT spending, most of the time, still comes from private data centers. As expected, everything is in the clouds. However, in reality, it is still on land.
That’s why AWS has growth in every major cloud.
A market of one?
As good as AWS has a head start in the cloud market, there’s no point in having a market of its own. That’s not interesting to the customer, and to be honest, it’s not interesting to the supplier.
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Early on, when AWS sold to early adopters, it took a lot of hard work to get mainstream businesses into the cloud. AWS has done an excellent job of attracting these customers, but, guess who has more credibility with this crowd? Microsoft. Historically, as Piper Jaffray and other surveys suggest, Microsoft is the enterprise provider.”most important“Or “indispensable” for the CIO. I have not seen data more recent than 2016and arguably AWS has steadily risen in CIO’s rating, but it’s still true that Microsoft’s introduction of Azure has helped many IT executives overcome their cloud constraints.
It’s also true that Google, a relative newcomer to the business, helps those same IT executives envision new frontiers of innovation in data science and beyond. While Google is not the only cloud that offers great machine learning/artificial intelligence/data science services, Google is unique in the way they have made some open source best technology to make its way the standard for the industry, as Alex Engler, a fellow at the Brookings Institution, has written. I’m sure some of my former AWS colleagues will argue that AWS services can be better one way or another, but that’s not the point: to win more business, better is There is a community that advertises new, innovative approaches to business, not simply one.
When It Was an AWS CEO (and current Amazon CEO) Andy Jassy reminisces 2017, “I don’t think in our wildest dreams we ever thought we’d have a six- to seven-year start” in the cloud. That good start, and the current lead, is almost certainly felt and felt good. But for AWS to continue to be a customer obsession, AWS needs competitors that can help grow and improve the market. We have that now, and it’s as good for AWS as it is for Microsoft, Google, Alibaba and more.
Disclosure: I work for MongoDB (and used to work for AWS), but the views expressed here are my own.
