Amazon Web Services (AWS) posted staggering second quarter revenue and income growth, and while its rivals continue to make strides AWS maintained its worldwide cloud market dominance.
The do-everything giant reported $6.1 billion in Q2 revenues from its AWS division, which was a 49-percent increase from the previous year. That result also came in ahead of forecasts of around $6 billion in revenues.
Amazon’s AWS business accounted for 11.5 percent of its parent company’s overall revenues for the quarter, which was an increase from the less than 11 percent it accounted for last year.
AWS operating expenses were kept on a tighter lease, which boosted net income by 80 percent year over year to $1.6 billion. This also came in ahead of forecasts, and accounted for more than half of Amazon’s $3 billion in net income for the quarter.
Amazon CFO Brian Olsavsky told investors during the company’s earnings call that AWS growth was spread across business segments.
“Our growth is coming from customers that span from startups to enterprise customers to government agencies, and they start small and then they continue to build and shift their businesses to us, and many of them have gone – a large number have gone all-in on AWS, and have had a chance to lower their cost structures as a result,” Olsavsky said, according to transcripts of the call.
AWS’ rivals all report results from their cloud operations slightly different, so making straight comparisons is not ideal. However, both Microsoft and Google posted robust Q2 numbers.
Microsoft, which is the world’s second largest cloud provider, late last week reported a 23-percent year-over-year surge in revenues from its Intelligent Cloud business that came in at $9.6 billion for the latest quarter. Microsoft CEO Satya Nadella has described its Intelligent Cloud platform as its push to integrate artificial intelligence (AI) into all of its applications and services.
The company also reported a 53-percent increase in its commercial cloud services revenue to $6.9 billion for the latest quarter.
Weep for the Weak
Despite the differing methods, Synergy Research Group said AWS is “in a league of its own” compared with its smaller rivals. The firm explained in its latest segment report that AWS’ 34 percent worldwide market share remained larger than its next four smaller rivals combined. Those four rivals include Microsoft, Google, Alibaba, and IBM.
“Revenue growth at Microsoft, Google and Alibaba far surpassed overall market growth rate, so all three gained market share, but market leader Amazon maintained its dominance as its market share nudged up a percentage point to 34 percent,” the report stated.
The overall cloud services market posted a 50-percent year-over-year increase in total revenues for the quarter. However, the four largest providers – minus IBM – showed a growing dominance of the market at the expense of smaller players.
“Collectively those four firms alone accounted for well over three-quarters of the sequential growth in cloud service revenues,” wrote John Dinsdale, chief analyst at Synergy. “In a large and strategically vital market that is growing at exceptional rates, they are throwing the gauntlet down to their smaller competitors by continuing to invest enormous amounts in their data center infrastructure and operations. Their increased market share is clear evidence that their strategies are working.”
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