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Inflation stunts growth of major cloud providers

AWS, Microsoft Azure and Google Cloud. The three public cloud services are among the fastest growing in recent years. And despite the adverse circumstances, in a scenario of international turbulence and with skyrocketing inflation, they continue to do so. However, they no longer do so with the momentum they showed just a few months ago.

Since 2019 and especially in the wake of the pandemic, the adoption of these services has skyrocketed by companies that needed to accelerate their digital transformation plans.

However, as the income statement for the last quarter shows, this frenetic pace of cloud consumption that we have witnessed in recent years could have begun to slow down, as the incipient economic crisis has started to affect the income statement of its clients.

aws

What continues to be the most popular public cloud service registered a growth in the last quarter of 33% compared to the previous period. And although it is a remarkable growth, in reality it experiences a slight setback, since three months before it had done so at 37%.

In presenting these results, Brian Olsavskyfinancial director of the firm, has acknowledged that “macroeconomic concerns” are having an impact on its income statement, but has been confident that its public cloud proposal compared to traditional investment in data centers will continue to be the trend dominant for many years.

Microsoft Azure

At its shareholder meeting, Microsoft reported that its revenue from Azure and other cloud services grew 40% during the most recent quarter compared to the previous quarter. That compared to a 46% growth rate the previous quarter.

Microsoft CEO Satya Nadella explained that Azure’s performance was affected by companies trying to cope with the macroeconomic situation, trying to do more with lessand that Microsoft was trying to help them do it.

«We are doing everything possible so that the invoices of our clients go down. And that explains some of the volatility in our Azure numbers, because that’s one of the great benefits of public cloud… Coming out of this macroeconomic crisis, public cloud will be even more of a winner because it acts as that deflationary force.”

Google Cloud

Lastly, Google Cloud Platform saw 35% growth in revenue during the last quarter, but that growth rate was lower than the 44% growth rate the company enjoyed in the first quarter of the year.

Asked by an analyst if Google Cloud Platform was seeing a slowdown and pullback from customers, Sundar Pichai, CEO of Alphabet and Google, was optimistic but moderated his position, acknowledging the impact inflation already has in some cases.

“In cloud, we continue to see strong momentum, substantial market opportunity. That said, some customers may be feeling other financial pressures and not a few are seeing their spending ability affected.”

A Gartner report from last June ensures that the market grew by 41.4% in 2021 to reach a total of 90.9 billion dollars. In 2021, the top five IaaS providers accounted for more than 80% of the market.

Amazon continued to lead the global IaaS market with a 38.9% market share, followed by Microsoft with a 21.1% market share. Alibaba was third with a 9.5% market share and Google was fourth with a 7.1% market share. Huawei completed the top 5 with a market share of 4.6%.

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