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AWS becomes $20bn company as demand for public cloud continues to soar

Amazon Web Services enjoys another stellar quarter of revenue growth, while its parent company continues to profit off the success of Alexa devices

Amazon Web Services (AWS) is now a confirmed $20bn entity, with its fourth quarter financial results seeing the cloud giant post 45% year-on-year revenue growth.

The company posted a quarterly revenue of $5.11bn, up from $3.536bn in Q4 2016, and saw its full-year revenue rise by around 42% to $17.46bn.

AWS CFO Brian Olsavsky attributed the company’s Q4 success to growing customer appetites for cloud services, as well as the company’s fervent product release cadence.

“Usage growth continues to be strong, growing at a higher rate than our revenue growth rate, and customers continued to add workloads and expand,” he said, in a conference call transcribed by Seeking Alpha.

“We’re adding new services and features all the time, over 1,400 in 2017 alone, and we’re very happy with the performance in the AWS business.”

Particularly now the company has established itself as a $20bn revenue run-rate business, he added: “We’re a $20 billion run rate in top line revenues for AWS, up from $18 billion last quarter. So we’re very happy with both the progression in new services and features that we’ve been able to bring to customers and also their response with continued geographic expansion.”

Amazon is not the only firm seeing its cloud bets pay off at the moment, as Microsoft’s second quarter financial results – released earlier this week – saw the company report 98% growth in its Azure public cloud division.

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Kate Hanaghan, chief research officer at IT analyst house TechMarketView, said comparing the performance of the two suggests Microsoft is regaining some of the ground it previously lost to Amazon in the cloud.

“The market is of course expanding at very healthy rates, but we also believe Microsoft is clawing back some of the ground it lost to AWS in the early days of public cloud market development,” she said, in a note to subscribers to TechMarketView’s daily email.

“Furthermore, this is a battle that is only going to intensify further – and in a way that could take the industry and market (and the ‘art of the possible’) into as yet unknown directions.”

Revenue bump

AWS parent company also enjoyed a quarterly, year-on-year revenue rise of around 38.2% to $60.5bn, and a full-year revenue bump of 30.7% to $177.9bn.

The online retail behemoth also banked an operating income of $2.1bn for the quarter, up from $1.3bn in Q4 2017, but saw a 2% dip in its full-year profit to $4.1bn.

Jeff Bezos, Amazon founder and CEO, cited consumer demand for Alexa-powered devices as playing a pivotal role in driving revenue growth for the three months to 31 December.

“Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often – expect us to double down,” he said.

He also credited the developer community with helping to drive adoption of Alexa by broadening the use cases for the technology. The company has sought to encourage this throughout 2017 with the rollout of enhanced financial incentives for people building skills for Alexa.

Furthermore, the full-year results also confirmed more than 30,000 skills now exist to enhance the functionality of the virtual assistant.

“We’ve reached an important point where other companies and developers are accelerating adoption of Alexa,” he said. “There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers.”

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