Amazon Web Services (AWS) continued to dominate the cloud services sector and be a major money maker for the company in the first few months of 2017. Amazon reported its net income rose to $724 million in the first quarter, with AWS revenue accounting for most of its profits at $809 million in operating income.
By comparison, AWS operating income was $604 million a year ago.
The cloud services leader grew its net sales 43 percent year-over-year to $3.7 billion for the quarter ending March 31. This compares to $2.6 billion in the first quarter 2016.
Amazon’s earnings, reported after the market closed on April 27, beat analysts’ expectations and sent the company’s stock up nearly 2 percent by mid-day April 28.
AWS’ first-quarter 2017 growth comes despite several price cuts to its cloud business in late 2016.
“There’s price decreases that are part of the business,” Amazon CFO Brian Olsavsky said during the company’s earnings call, citing seven price decreases timed for Dec. 1, 2016. “About a third of the impact of those was seen in Q4.”
Olsavsky didn’t report any usage growth numbers but noted AWS has reached a $14 billion annual run rate.
“The innovation pace continues to accelerate,” Olsavsky said. “We are very proud of the launches in Q1: the Amazon Connect, which we think will provide customer service-like capability to customers and Amazon Chime, which we believe will resonate with customers. We’ve had a lot of adoption of our new services. Customers migrated more than 23,000 databases using the AWS database migration services since that launched last year.”
In addition to AWS revenue growth, the cloud provider also signed several enterprise customers in the first quarter. This included live entertainment and ticketing company Live Nation going “all in” on AWS and Liberty Mutual, which is using AWS to speed implementation of its business platform. Also Snap Inc. expanded its use of AWS and announced a new agreement to use $1 billion of AWS services over the next five years.
While AWS remains the market leader, growth is slowing. The business saw 64 percent growth in the first quarter of 2016.
Microsoft Azure reported its revenue grew 93 percent in the first quarter. Google’s parent company Alphabet didn’t separate out numbers for its cloud businesses during yesterday’s earnings call. They did, however, say the Google Cloud Platform is one of the fastest growing businesses across Alphabet.
And earlier this week, IBM said it opened four new U.S. data centers and announced plans to open four more across the globe before end of the second quarter.