Like Azure last week, AWS reported some slippage in its cloud earnings growth numbers today, dropping from 49% growth last year at this time to 37% this year. Total revenue increased from Q2 last year, from $6.105 billion to $8.381 billion this year. Today’s report puts the company on an astonishing run rate of more than $33 billion — just for AWS. That’s a successful company, never mind one that’s a division of a larger organization.
And Amazon has to be thrilled that it is, as AWS accounted for 13% of the company’s total income this quarter as it continues to help lead the way for the online retailer. All of that is mostly good news by most measures, but the slowing growth in a market that is continuing to accelerate is curious for both Microsoft and Amazon, as both companies continue to dominate the cloud infrastructure market.
Amazon controls approximately 33% of the market, while Microsoft accounts for around 16%. Regardless of whose numbers you look at, AWS has approximately double the market share of Microsoft, but Microsoft remains the only company with double-digit market share up until this point.
The drop by both companies could simply be attributed to the law of large numbers, which says as big as these two companies are, sustaining the kind of growth rates they were on becomes increasingly difficult over time, even in an accelerating market.
“What we are seeing is the law of large numbers where the revenue gets so high, the growth percent gain gets harder. AWS’s dollar gain is still larger than the number 2-5 [rivals] combined,” Patrick Moorhead, principal analyst at Moor Insights & Strategy, told TechCrunch.
As markets mature, growth just naturally slows down, and Amazon couldn’t maintain growth in the 40s forever no matter how hot the market is. Regardless, the revenue remains impressive and AWS continues to help drive Amazon’s success.
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