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AWS grows as Amazon posts net loss

AWS continues to dominate the public cloud market but Amazon has seen its revenue squeezed

Amazon has reported a net loss of  $3.8bn in the first quarter, compared with net income of $8.1bn in the first quarter of 2021. The net loss includes the company’s investment in Rivian Automotive.

Andy Jassy, Amazon CEO, said: “The pandemic and subsequent war in Ukraine have brought unusual growth and challenges.” However, he said the AWS public cloud business has grown 34% annually over the last two years, and 37% year-on-year in the first quarter,

“AWS has been integral in helping companies weather the pandemic and move more of their workloads into the cloud,” Jassy added. AWS grew net sales to $18.4bn from $13.3bn in Q1 20201.

Overall, Amazon reported a 7% increase in net sales of $116.4bn in the first quarter, compared with $108.5bn in the first quarter of 2021.

“Our Consumer business has grown 23% annually over the past two years, with extraordinary growth in 2020 of 39% year-over-year,” said Jassy. This meant that over the past two years, the company has needed to double the size of its fulfilment network.

“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfilment network,” said Jassy. “We know how to do this and have done it before. This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”

The growth of AWS is reflected in Synergy Research’s latest report on the public cloud market.. The analyst firm reported that the cloud market grew by 34% a year, with Amazon, Microsoft and Google accounting for two-thirds of the total market.

According to Synergy Research Group, enterprise spending on cloud infrastructure services in the first quarter of 2022 approached  $53bn, up 34% from the first quarter of 2021, making it the 11th time in 12 quarters that the year-on-year growth rate has been in the 34-40% range.

“As the vibrant cloud market continues to grow rapidly, Amazon continues to lead, with its worldwide market share remaining at 33%,” Synergy noted. “For the third consecutive quarter, its annual growth came in above the growth of the overall market.”

Looking at AWS’s rivals, Synergy reported that Microsoft has continued to gain almost two percentage points of market share each year. Google’s annual market share gain is approaching one percentage point, it said.

“While the level of competition remains high, the huge and rapidly growing cloud market continues to coalesce around Amazon, Microsoft and Google,” said John Dinsdale, a chief analyst at Synergy Research Group. “Aside from the Chinese market, which remains totally dominated by local Chinese companies, other cloud providers simply cannot match the scale and geographic reach of the big three market leaders.”

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