The trend can’t be ignored any longer. Amazon Web Services, the cloud-computing business that last year churned out more than $12 billion in revenue for Amazon, is slowing down.
The trend can’t be ignored any longer. Amazon $AMZN Web Services, the cloud-computing business that last year churned out more than $12 billion in revenue for Amazon, is slowing down.
Amazon said April 27 that AWS contributed $3.7 billion in revenue in the latest quarter, a 43% increase from the same period the previous year. That marks the seventh consecutive quarter that year-over-year growth in AWS has slowed.
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(Overall, Amazon beat expectations in the first quarter, with sales up 23% year-over-year to $35.7 billion and net income that rose 41% from the previous year to $724 million. The stock is up 3.7% in after-hours trading.)
On some level, the slowdown is to be expected. AWS was a smaller business two years ago making off-the-charts growth rates easier to attain. The 81.5% growth that AWS reported in the second quarter of 2015, and the 78% growth it reported in the one after that, were hardly bound to last. And most companies would kill for a multibillion-dollar business growing at a 40% clip.
But cloud-computing is thought to be a commodity business, meaning customers will go to the service that offers the most for the lowest price. Amazon’s competitors in infrastructure cloud services include Microsoft $MSFT, IBM $IBM, Google $GOOGL, and Salesforce $CRM. Amazon has a handy lead, but that doesn’t mean it will stay ahead. Microsoft Azure is growing more quickly than AWS, up 93% year-over-year for each of the last two quarters. Google believes its prowess in artificial intelligence gives it a competitive advantage.
