NEWS ANALYSIS: Though there is no shortage of cloud competition, AWS is likely to remain the leader for the foreseeable future as revenue hit $5.4 billion for the first quarter of 2018.
When Amazon first started the enterprise cloud revolution with the launch of Amazon Web Services (AWS) back in 2006 there wasn’t a clear indication if it would be a profitable venture. A dozen years later and the answer is a definitive yes, with AWS reporting on April 26 revenue of $5.4 billion in its 2018 first quarter.
The $5.4 billion figure for quarterly cloud revenue is impressive and noteworthy for many reasons. On a year over year basis, AWS grew revenue by 49 percent, showing accelerating growth in the public cloud. For comparison, Amazon only began to break out AWS revenue starting with its first quarter fiscal 2015 earnings. At the time, AWS reported revenue of $1.57 billion and Amazon has continued to grow cloud revenues at a rapid pace every quarter since.
“AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down,” Jeff Bezos, Amazon founder and CEO stated. “AWS lets developers do more and be nimbler, and it continues to get even better every day.”
There are actually two key levers that Amazon has used to drive cloud growth. The first has always been cost efficiency, which is a core benefit of the cloud. Rather than paying fixed costs for hardware and services, the cloud by definition provides an elastic model where users pay only for what they use. In 2006, when AWS started, elastic services and pricing was a novel idea, but now in 2018 it is increasingly the norm.
The other key driver is an incessant rollout of new and evolving services. AWS started with the Elastic Cloud Compute (EC2) service in 2006 and while that remains a core service, every quarter AWS adds more capabilities to its roster.
At the AWS Summit event in San Francisco on April 4, Amazon announced multiple new capabilities that expand the company’s public cloud services. Among the services announced in April were the AWS Secrets Manager, AWS Firewall Manager and Amazon Private Certificate Authority services to help improve security. Going a step further, AWS also announced that its cloud services are fully compliant with the European Union’s General Data Protection Regulation (GDPR) rules which come into effect on May 25.
AWS is also positioning itself to be a leading location for Artificial Intelligence thanks to its Sagemaker services which provide an easy on-ramp for organizations to benefit from machine learning capabilities. According to Amazon, tens of thousands of customers are currently using AWS machine learning services.
Perhaps even more impressive is how organizations that were rivals of AWS in 2006 , are now working directly with AWS. GoDaddy, which operates one of the world’s largest website hosting businesses announced during the quarter that it has moved to AWS. VMware has also embraced AWS, with the VMware Cloud on AWS service.
Certainly at this point in 2018 there is plenty of competition.
Both Google and Microsoft have aggressively grown their cloud platforms in a bid to keep pace with AWS. The open-source OpenStack platform has also been widely adopted by by carriers and private enterprises alike that want or need more control or customization.
The emerging concept known as “multicloud” deployment is in part an attempt to enable organizations to deploy to more than just AWS, by using Kubernetes and container micro-services. AWS, Google, Microsoft and OpenStack all have Kubernetes support today to help enable the multicloud world. Though even when it comes to containers, AWS has managed to differentiate, with its Fargate service, which provides a serverless approach to managing Kubernetes clusters.
Though cloud competition will continue to grow, the bottom line is that no cloud is bigger than AWS in terms of publicly reported revenue today and AWS shows no signs of slowing down anytime soon either.