Somehow, AWS and cloud growth continues to accelerate

Amazon leads cloud vendors to even faster growth at huge scale -- is there anything left for data centers?

Somehow, AWS and cloud growth continues to accelerate
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If the numbers weren’t so clear, I’m not sure I’d have believed it was possible. After all, an enormous business that earned $17.46 billion in 2017 and grew approximately 45 percent is bound to slow down, right? Simply maintaining that insane level of growth would be virtually impossible, right?

But somehow, Amazon Web Services (AWS) is actually boosting its growth. After expanding by 42 percent in the third quarter of 2017, AWS increased that number to 45 percent in the fourth quarter … and then did it again, growing 49 percent in the first quarter of calendar 2018.

In financial results announced last week, the cloud infrastructure leader blew past Wall Street estimates, as well, with earnings of a whopping $5.44 billion, leading to a healthy $1.4 billion in operating income, up 57 percent. Amazon CEO Jeff Bezos highlighted the growth in a statement:

AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down. As a result, the AWS services are by far the most evolved and most functionality-rich. AWS lets developers do more and be nimbler, and it continues to get even better every day. That’s why you’re seeing this remarkable acceleration in AWS growth, now for two quarters in a row.

Significantly, Amazon CFO Brian Olsavsky added that usage growth is outpacing revenue growth as the company continues to add new features and capabilities.

AWS is not alone in its cloud success

Maybe so, but amazing as those numbers are, AWS growth isn’t even best in class, at least not in percentage terms. Microsoft announced its first quarter 2018 revenue for its Azure cloud service grew 93 percent, though the company did not share the actual dollar figures. And Microsoft’s "Intelligent Cloud," which also includes Microsoft's server business, generated $7.9 billion in revenues, up 17 percent.

Meanwhile, over at Google, where cloud revenue now tops $1 billion per quarter (still less than a fifth of AWS’ revenue), CEO Sundar Pichai said in an earnings call with analysts that the unit is signing "significantly larger, more strategic deals." Of course, he didn’t mention any names and didn’t share any new cloud numbers. Even IBM reported strong cloud numbers, with CEO Ginni Rometty touting the company's 14 percent currency-adjusted growth in cloud revenue.

Still, given AWS’ huge lead, if current trends continue, AWS does not seem in danger of losing its market dominance any time soon.

Here’s the big takeaway: It seems like I write this story every quarter.

Every three months, I express amazement at the huge growth in cloud infrastructure spending and speculate about the effects of these huge investments on the funds available to build new private data centers. Well, nothing has changed, except that somehow this time cloud mega-growth got even bigger. While actual growth rates will no doubt fluctuate going forward, right now it seems clear that only a sucker would bet against the cloud’s momentum. So, if you’re all in on private data centers, you had better have a darn good reason.

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