Amazon is no longer the frontrunner in the cloud industry it used to be. The world’s biggest cloud provider recently reported decreased revenue for its AWS unit for the first quarter of 2023, growing only at 16% compared to 40% rate it was growing at a year ago. This points to a clear deceleration in growth for the company.
Meanwhile, Microsoft’s Azure cloud unit and Google Cloud have posted an increase of 31% and 28% in the same period, respectively. This has caused the gap between AWS and the two rivals to narrow. According to Synergy Research Group, AWS had a market share of 32% while Microsoft had 18% of the market in the first quarter of 2020. AWS’ market share still remains at 32%, however Microsoft’s has now grown to 23%.
This slow growth has tainted investors’ sentiment and made them cautious. On Thursday, Amazon’s Chief Financial Officer Brian Olsavsky noted a decrease in year-over-year growth rate to 11% in April.
To reaccelerate growth, Microsoft hopes to draw in AI workloads to its Azure cloud platform. In 2019, Microsoft invested billions of dollars in Open AI, an AI company, and this partnership is expected to bring AI tools and services to developers and companies. Microsoft CFO Amy Hood said Azure cloud’s AI services alone could add 1 percentage growth rate in the second quarter.
In contrast, Amazon was rather muted in its commentary on AI, according to Bernstein analysts. Amazon declined to comment for the story.
The only way for Amazon to regain its supremacy in cloud industry is to increase its investments in AI and other cloud services to increase market share.
About Amazon: Amazon is an American multinational technology company and one of the biggest online retailers in the world. It was established in 1994 and it primarily focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence.
About Brian Olsavsky: Brian Olsavsky is the Chief Financial Officer of Amazon. Prior to joining Amazon, he served as Chief Financial Officer of Blue Nile and the Giant Eagle’s GetGo convenience store chain. Olsavsky is a graduate of the University of Pittsburgh’s Katz Graduate School of Business.
