ldprod - stock.adobe.com
Amazon Web Services (AWS) has played down the competitive threat to its lead in the public cloud market, as its fourth-quarter results confirmed that the company is now a $40bn revenue run rate business.
The cloud services arm of Amazon.com posted fourth-quarter revenue of $9.95bn for the three months to 31 December 2019 – a year-on-year rise of 34%. The division also reported a 19% uptick in profit, which totalled £2.6bn during the quarter.
The cloud services giant is the undisputed leader of the public cloud, but speculation about the threat posed by the growth of its nearest competitor, Microsoft, has risen markedly in recent months.
This has been fuelled in part by the announcement in October 2019 that AWS had lost out to Microsoft in being awarded a $10bn, decade-long public cloud contract with the US Department of Defense. Amazon is legally contesting the outcome of the deal.
Also, much has been made about the difference in annualised revenue growth rates that both firms have reported in their financial results, with Microsoft reporting a 62% year-on-year jump in its fourth-quarter numbers versus AWS’s 34% growth.
This is markedly down on the same quarter last year, when AWS reported a year-on-year revenue growth rate of 45% for the three months to 31 December 2018, and also lower than the 35% year-on-year revenue growth it posted in Q3.
At the same time, data from IT market watcher Synergy Research Group shows that Amazon’s share of the public cloud market has been holding steady at 33% for several quarters now, while Microsoft is managing to accrue two to three additional percentage points of share each year, with Synergy’s data recently suggesting that the firm has a total cloud market share of around 16%.
In a conference call with analysts, transcribed by Seeking Alpha, Amazon chief financial officer (CFO) Brian Olsavsky played down the impact of such competitive threats and said the company remains content with its top-line growth.
“We’re very happy with the progress of the revenue and our adoption and acceptance by customers,” he said. “As far as competitive [threat] is concerned, we think we have [started] with a very big lead in this space because of our many years of investment, not only in capacity, but also in services and features that we provide to customers.”
Read more about AWS
- Amazon’s CFO claims slowdown in revenue growth and capital expenditure should not be interpreted as signs of distress for any of its business units, as firm shifts growth strategy to prioritise operational efficiency.
- Amazon Web Services CEO Andy Jassy claims “significant political interference” is the reason why the company lost out to Microsoft on securing a decade-long cloud contract with the US Department of Defense.
Elsewhere on the call, Olsavsky picked out a couple of other areas that mark Amazon out from its competitors, while also shedding some light on the firm’s investment priorities in recent months.
This has included an expansion of its sales and marketing activities, and initiatives designed to increase its penetration of the enterprise market, which has focused on creating vertical market-specific services and support offerings to customers.
“Our product set leads the market, and we add to it at a quicker pace than our competition, so actually the gap on capacity and features [between AWS and its rivals] is growing as we speak,” he said.
“We continue to expand. We’re now in 69 availability zones across 22 geographic regions. So I think it’s the combination of increased sales support and better products that hit customers’ needs, and also the geographic expansions.”
Read more on Infrastructure-as-a-Service (IaaS)
Amazon posts 'better than expected' Q3 results as Covid-19 pandemic continues to drive sales up
AWS growth rate slows in Q2, as Amazon retail's run of quarterly record profit growth ends
Amazon cautions against reading too much into slowdown in AWS revenue growth rate
Synergy Research Group hails 2018 as standout year for cloud infrastructure market growth