Alison Griswold | Quartz | April 29, 2017 | 0 Comments

Amazon’s Best Money-Making Machine Is Slowing Down

Gil C/Shutterstock.com

The trend can’t be ignored any longer. Amazon Web Services, the cloud-computing business that last year churned out more than $12 billion in revenue for Amazon, is slowing down.

Amazon said April 27 that AWS contributed $3.7 billion in revenue in the latest quarter, a 43 percent increase from the same period the previous year. That marks the seventh consecutive quarter that year-over-year growth in AWS has slowed.

(Overall, Amazon beat expectations in the first quarter, with sales up 23 percent year-over-year to $35.7 billion and net income that rose 41% from the previous year to $724 million. The stock is up 3.7 percent in after-hours trading.)

On some level, the slowdown is to be expected. AWS was a smaller business two years ago making off-the-charts growth rates easier to attain. The 81.5% growth that AWS reported in the second quarter of 2015, and the 78 percent growth it reported in the one after that, were hardly bound to last. And most companies would kill for a multibillion-dollar business growing at a 40 percent clip.

But cloud-computing is thought to be a commodity business, meaning customers will go to the service that offers the most for the lowest price. Amazon’s competitors in infrastructure cloud services include Microsoft, IBM, Google, and Salesforce. Amazon has a handy lead, but that doesn’t mean it will stay ahead. Microsoft Azure is growing more quickly than AWS, up 93 percent year-over-year for each of the last two quarters. Google believes its prowess in artificial intelligence gives it a competitive advantage.

Comments
JOIN THE DISCUSSION

Thank you for subscribing to newsletters from Nextgov.com.
We think these reports might interest you:

  • Modernizing IT for Mission Success

    Surveying Federal and Defense Leaders on Priorities and Challenges at the Tactical Edge

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • Effective Ransomware Response

    This whitepaper provides an overview and understanding of ransomware and how to successfully combat it.

    Download
  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download

When you download a report, your information may be shared with the underwriters of that document.