June 27, 2020

1798 words 9 mins read

AWS and Google Cloud report rampant growth

AWS and Google Cloud report rampant growth

The hyperscaler duo both smashed earnings forecasts indicating a healthy public cloud market, but market leader AWS says Q3 was still a ‘a mixed bag’

       Two of the public cloud market's key giants both logged barn storming Q3s, despite pandemic pressures eating into revenues in other parts of their businesses.

At first glance - How the two compare Google Cloud revenues shot up 44.5 per

cent to $3.44bn (2.95bn). Parent company Alphabet logged revenues of $46.17bn beating Wall Street’s estimates of $42.9bn. It’s a return to form for Alphabet, which saw its sales decline in Q2 for the first time since the company went public in 2004, in its worst performance since the global financial crisis in 2009. The Google Cloud segment includes sales from Google Cloud Platform (GCP), Google Workspace (formerly G-Suite) productivity tools and other enterprise cloud services. Meanwhile AWS' Q3 sales were also up double-digits, rising 29 per cent to $11.6bn (9.94bn). As a whole, Amazon’s third quarter revenue grew 37 per cent to $96.1bn. However AWS' growth rate is significantly less than quarters in previous years. AWS used to generate growth in the region of 49 per cent when it first started reporting AWS as a separate unit in its financials back in 2015, and it has beentrending downwards every quarter since Q2 2018. Earlier in the week, Microsoft Azure logged sales growth of 48 per cent for its Q1. However, as market leader, AWS has a much a larger revenues base. And within the company, AWS still brought in the lion’s share of Amazon’s operating income in Q3; $3.53bn out of $6.2bn for the vendor as a whole. Both companies boasted that the cloud infrastructure services market is in robust health as COVID-19 lockdowns fuel migrations and workload demands. Google Cloud - Growing rapidly due to AI and multi-cloud support In an earnings call transcribed by Seeking Alpha, Alphabet CEO Sundar Pichai said Google Cloud’s stellar growth was fuelled by the vendor’s investments in high-value AI and machine learning capabilities. “As the shift to digital accelerates, Google Cloud continues to provide a foundation for data processing and analytics, one of the fastest growing segments of the market,” he said. Pichai highlighted BigQuery in particular; Google Cloud’s real-time and predictive analytics tool. “Customers value differentiated AI/ML-based industry specific solutions,” he said. Google Cloud remains the third largest global hyperscaler by market share, behind AWS and Azure. Chief financial officer for Alphabet, Ruth Porat, said the vendor is unfazed by remaining in third place, pointing to Google Cloud’s almost 45 per cent growth rate in Q3, and a forecast of hitting an annual run rate of $13.77bn for the financial year. “We are investing aggressively in cloud given the opportunity that we see,” she said. “Frankly, the fact that we were later relative to peers, we’re very encouraged by the pace of customer wins and the very strong revenue growth in both GCP and Workspace. We do believe were still early in this journey.” Another trends driving the continued momentum for the public cloud market for both vendors is customers increasingly moving to the cloud to drive efficiencies and lower IT costs in lockdowns. For Alphabet CEO Pichai, he sees Google Cloud offering multi-cloud support as a major USP for the company. “Our strength in multi-cloud is an advantage,” he said. “This is helping us win large datacentre and IT transformationdeals like Nokia, which recently announced its migrating and modernising approximately 30 datacentres across 12 countries onto Google Cloud.” He added: “Customers are looking to supporthybrid work environments. We’re seeing significant growth in demand.” The Nokia deal was announced two weeks ago, which the Nordic telco firm said was driven by a desire to “exit on-prem infrastructure as part of a new cloud-first strategy”. AWS - Cloud is a mixed bag' but operating profits are up 56 per cent For public cloud’s leader AWS, there were also large customer wins to talk up. “We’re seeing a lot of customers who are now moving to the cloud at a faster pace,” CFO Brian Olsavsky said on a Q3 earnings call. He revealed that Amazon has incurred more than $7.5bn “incremental COVID related costs” in the first three quarters of 2020 in other parts of the business including logistics, which AWS strong performance is helping to offset. “AWS customer usage remained strong. We continue to see companies meaningfully growing their plans to move to AWS.” Olsavsky noted that despite Q3’s revenues growth rate being a flat 29 per cent, the same as in Q2, the dollar amount of $11.6bn is still the largest the vendor has ever posted. Still, he conceded that COVID-19’s devastating impact on verticals such as retail meant Q3 was “a mixed bag” for AWS. “Cloud is a mixed bag right now because we’re very happy with the cloud performance and we’re seeing a lot of customers who are now moving to the cloud at a faster pace. It accelerated their plans,” he said. “But there’s anomalies in different industries going on this year like in travel and hospitality, which are down. A lot of companies are in a holding pattern in the middle and some are doing really well - things like video conferencing, gaming, and remote learning, and things tied to entertainment.” However, AWS' bottom line was much healthier. Operating profits were up 56 per cent. TechMarketView analyst Marc Hardwick noted that this is where AWS is excelling. “What looks most promising is that AWS appears to be turning market leadership into significant growth of the bottom line, with momentum building on a wide range of higher value activities from, payments, toAmazon Connectin the Call Centre toOperationalising AI/ML.” He said Looking into Q4, both vendors expect that this ever-present drive to cut own expenses as global lockdowns linger will continue to drive companies to the cloud. “Going to cloud is a good way to cut down on expenses long-term,” Olsavsky said. “We feel good about the state of the business and the state of our sales force and their ability to drive value during this period.”

Author: nima.green@incisivemedia.com(Nima Green)

Date: 2020-10-30

URL: https://www.channelweb.co.uk/news/4022565/aws-google-cloud-report-rampant-growth


‘The UK is our most important market right now’ - French software vendor on mid-pandemic expansion (2020-11-09) Intranet in a box vendor Powell Software has fingered the UK market as most important to its expansion plans according to UK country manager Philippe Gomes The vendor was spun out from French reseller Expertime which has built intranet systems for large French firms Powell specialises in creating digital solutions built on Microsoft 365 as well as collaborative tools for Microsoft Teams It receive..
How the channel kept the UK moving in 2020 (2020-11-13) At last nights Channel Awards we took a quick look back at how distributors resellers and MSPs have proved their worth this year The channel has displayed its true colours in 2020 IT distributors resellers and managed services providers have kept essential goods flowing worked out of hours to install and support infrastructure and devices in ICUs hospitals and care homes supported frontline worker..
CrowdStrike CEO attacks legacy vendors as sales soar (2020-12-04) Vendor sees revenue climb 86 per cent in Q3 CrowdStrike CEO George Kurtz has called out some of the biggest names in cybersecurity after seeing sales rocket at his firm The vendor saw sales climb 86 per cent year on yearto $2325mduring the quarter ending 31 October Annual run-rate revenue was up 81 per cent to $9074m Kurtz has frequently called out Symantec now owned by Broadcom on earnings calls ..
Check Point: We have created even stronger bonds with our channel partners in 2020 (2020-11-06) In the latest of our Meet the Shortlisters series Martin Rutterford head of UK managed channels at Check Point pictured with the vendors channel team talks to CRN about the vital role of communication with partners why it will always be channel first for the vendor and what it means to make the shortlist for Security Vendor of the Year plus more Give us a flavour of your channel strategy - how lon..
James Chadwick (2020-11-16) What has been your personal highlight of 2020? It has to be watching Microsoft and our partners come together during COVID-19 to provide critical services to support our national infrastructure and empower front-line workers to deliver incredible and brave achievements From clinicians using HoloLens devices to continue critical care in hospitals and keep staff safe to our involvement in Ventilator..
Ericsson closes $1.1bn Cradlepoint acquisition (2020-11-02) Telco giant claims acquisition will help it grab market share in 5G enterprise space Ericsson has closed its acquisition of wireless edge vendor Cradlepoint as it looks to grab market share in the 5G enterprise space The $11bn all-cash acquisition was first announced in September and would see US-based Cradlepoint be acquired by the Swedish telco firm At the time Ericsson said the deal would close.. Ericsson closes $1.1bn Cradlepoint acquisition
Pulse Secure VP: Hybrid offices will be the new normal (2020-11-02) In the latest of our Meet the Shortlisters series Paul Donovan vice president of EMEA sales at security vendor Pulse Secure pictured explains why the VPN is not dead how the pandemic has changed working practices for good and why being shortlisted for a Channel Award is all down to its partners Give us a flavour of your channel strategy - how long have you worked with the channel how is your progr..
Bytes aiming for December IPO after barnstorming H1 (2020-11-02) Software reseller set to list on the London and Johannesburg stock exchanges Bytes Group has revealed plans to float on the London and Johannesburg stock exchanges with CEO Neil Murphy telling CRN that the firm is aiming for a mid-December IPO The move would see Bytes demerged from its parent company Altron Bytes CEO Neil Murphy said in statement: We are delighted to be taking these steps towards ..
Dan Waters (2020-11-16) What has been your personal highlight of 2020? My personal highlight has been getting to spend a lot more time at home with my family Usually theres a lot of travel involved in my working week but as this has not been possible since the pandemic hit this year its been fantastic to spend quality time with my family From a professional perspective given the extremely challenging circumstances that w..
Lenovo partner in £4m supercomputer deal with university (2020-11-18) New compute facility will be provided by Lenovo The University of Birmingham has won 4m to develop a high performance compute HPC system via its framework partner OCF The system will be provided by Lenovo via OCF which will support the logistics of delivering the system OCF underwent an MBO in November last year and its revenues for its year ending 31 March 2019 stood at 165m according to reports ..