Last week was a fun one if you are into tracking quarterly cloud progress from Microsoft Azure, Google GCP, and Amazon AWS. While most of the stories have already been told about Microsoft and Google, I wanted to focus in on AWS’s quarterly performance as reflected in their earnings numbers. AWS reports numbers that are unequivocally 100% cloud revenue and is the only cloud provider to both explain exactly what is in its cloud number and break out a pure cloud number during earnings. I also wanted to highlight some company commentary related to AWS rank in Gartner’s IaaS Magic Quadrant.
AWS grows $2.3B in Q2 to $8.4B
Amazon reported AWS Q2 revenue at $8.4B, a gain of $2.3B or 37%. Some pundits were surprised the gain was only 37% which I find a bit comical. To put that into proper perspective, AWS’s quarterly gain was likely larger than the entire 2018 annual IaaS sales from Google, IBM, and Tencent cloud combined. Compared to Azure IaaS, based on my rough estimates, AWS revenue growth in dollars was likely 2-3X larger.
Why is the percentage of AWS growth lowering but the revenue numbers keep growing in eye-popping size? It’s simple- the larger the numbers get, the harder it is to keep the percentage rate increasing. This isn’t true just for AWS; it’s also true for Azure and any other large and growing business.
AWS widens the gap in Gartner IaaS MQ
Every time a significant report comes out from an analyst firm, whether it be Gartner, IDC, Canalys, or my firm, Moor Insights & Strategy, companies will game it to get the best possible exposure. There’s nothing wrong with that.
For instance, Google Cloud trumpeted its movement in Gartner’s recent IaaS Magic Quadrant (MQ), and you would have thought it moved a mile. To GCP’s credit, it moved, but not a lot, but its progress is almost imperceptible to the naked eye when comparing its placement to last year’s MQ, and GCP is still firmly in the bottom of the Leader category, well behind AWS and Azure. On the other hand, AWS, for the ninth consecutive year, was positioned at the top in the Leader’s quadrant in IaaS MQ.
In the earnings release, AWS also said it:
- earned the highest placement for “Ability to Execute”
- earned the highest placement for “Completeness of Vision”
- widened the gap between AWS and all others in the report
The odd thing about the Gartner graphic was that even though AWS “widened the gap,” Gartner didn’t move the placement of AWS’s dot on the MQ. I am told that Gartner likes to have some room for vendors to grow as the category matures. Indeed, it seems that AWS was so strong on both axes that they can’t move further upward or rightward, which speaks to their ongoing excellence in Gartner’s view.
Like the mere 37%, $2.3B quarterly growth, not as many get excited about AWS basically “winning” the IaaS MQ for nine years and even widening the gap with everybody. It’s hard to be #1.
Oher relevant AWS disclosures
AWS also disclosed some juicy tidbits related to new and significant customer wins:
- NASCAR chose SageMaker as its internal standard for ML and AI. SageMaker is AWS’s end to end service for AI workloads that customers can use all the way from data ingress and cleansing to train, tune and deploy production inference workloads.
- Emirates NBD (National Bank of Dubai), a bank with $136B in assets, says it is using AWS ML services to improve its retail banking experience. AWS offers three tiers of services. At the bottom of the stack for ML practitioners and data scientists, it offers industry-leading infrastructure and frameworks. Next, for data scientists and developers who want a more automated experience, AWS offers SageMaker to help make it easier and faster to train, tune and deploy models. At the top of the stack, AWS offers fully managed AI services like Personalize, Textract, Polly, Lex, etc, which require no machine learning experience at all for software developers to add AI to any application.
- Hyundai Electric, who manufactures electric power equipment out of Korea, launched an HPC system with AWS. I am guessing this is for design simulations. HPC From a networking perspective, Elastic Fabric Adapter improved the HPC experience making it easier to move data more quickly.
- Sony Music Entertainment Japan is building its music DRM system with Amazon Managed Blockchain. This is a service AWS announced at its latest reInvent.
Wrapping up
Amazon AWS continues to gobble up cloud business left and right and Q2 is evidence of that. While the growth percent declined a bit, the real dollar value of that growth is huge and much bigger than its competitors by a mile. While AWS didn’t need Gartner to tell anyone it does great in IaaS, it was interesting to see after nine years at the top, it widened its lead this quarter. What a machine.
