AWS Cloud Revenues Grow 46% During the Third Quarter 2018

Amazon reported another great quarter yesterday, saying that its net sales for the third quarter 2018 increased 29 percent to $56.6 billion, compared with $43.7 billion in the third quarter 2017. Net income increased to $2.9 billion in the third quarter, or $5.75 per share, compared with net income of $256 million, or $0.52 per share, in third quarter 2017.

During the quarter, its Amazon Web Services (AWS) cloud business saw revenue growth of 46 percent. Amazon CFO Brian Olsavsky, said, “This quarter is slightly down, but still 46 percent growth is very strong. We are at an annualized run rate above $26 billion, and that was about $18 billion this time last year. So we’re very happy with the growth in the business, the momentum that we’re seeing with enterprise customers. And we just mentioned on the cost side, it’s been a very good year from gaining greater efficiencies in our infrastructure costs.”

Other cloud providers, such as Microsoft, saw small dips in their business during the quarter, as well.

According to Synergy Research’s initial analysis of the quarterly cloud market: “The year-on-year growth rate dropped off a little this quarter, but that is not surprising given the huge scale that the market has now reached. The real big news is that Amazon, Microsoft, Google, and Alibaba continue to increase their share of the worldwide market as smaller players struggle to keep pace.”

Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS, and hosted private cloud services) are now well over $17 billion. The combined Q3 growth rate of 45 percent compares with a full-year 2017 growth rate of 44 percent and a 2016 growth rate of 50 percent.

Busy Quarter for AWS Cloud

During the quarter, AWS struck a multi-year partnership with DXC Technology to build a new multi-billion dollar DXC – AWS Integrated Practice. The arrangement will focus on helping DXC Technology clients migrate their existing IT environments and applications to AWS.

The company also announced some product updates during the quarter:

AWS announced the general availability of new High Memory instances for Amazon Elastic Compute Cloud (Amazon EC2). Built to run large in-memory databases, including production deployments of SAP HANA, Amazon EC2 High Memory instances deliver 6 TB, 9 TB, and 12 TB of memory today, with 18 TB and 24 TB instances coming in 2019.
AWS announced the general availability of T3 instances, the next generation of burstable general-purpose instances for Amazon EC2. Designed for applications with variable CPU usage that experience occasional spikes in demand, T3 instances enable customers’ applications to burst to meet temporary traffic peaks and then scale back down to operate at typical traffic levels. T3 instances feature Intel Xeon Scalable processors and support up to 5 Gb/s in peak network bandwidth.
AWS announced general availability of a high frequency instance (z1d) for Amazon EC2, as well as the next generation of memory optimized instances (R5), and memory optimized instances with local storage (R5d). z1d instances are designed for workloads requiring the highest single-thread performance along with a large amount of memory; these are workloads such as electronic design automation, relational databases, and financial simulations.
AWS announced the general availability of Amazon Aurora Serverless, a new deployment option for Amazon Aurora that automatically starts, scales, and shuts down database capacity with per-second billing for applications with less predictable usage patterns. Amazon Aurora Serverless offers database capacity without the need to provision, scale, and manage any servers.
At VMworld 2018, AWS announced Amazon Relational Database Service (Amazon RDS) on VMware. With Amazon RDS on VMware customers can set up, operate, and scale databases in VMware-based software-defined data centers and hybrid environments and migrate them to AWS or VMware Cloud on AWS. Available in the coming months, Amazon RDS on VMware will support Microsoft SQL Server, Oracle, PostgreSQL, MySQL, and MariaDB databases.
Together with VMware, AWS also announced the expansion of VMware Cloud on AWS into the AWS Asia Pacific (Sydney) Region, with additional regions expected to go live in Q4 including Asia Pacific (Tokyo), EU (Ireland), U.S. West (California), U.S. East (Ohio), and AWS GovCloud (U.S.). VMware Cloud on AWS offers customers an operationally consistent way to run, manage, and secure applications in a hybrid cloud, with access to a broad range of comprehensive AWS services and disaster protection.