AWS says growth dropped to mid-teens to start new year as customer cost cutting continues

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Yesterday Amazon reported earnings with AWS rising a modest 20% for for the quarter over the prior year to $21 billion. But even perhaps more troubling, the corporate reported in the earnings call with analysts that development dropped even further into the mid-teens for the first month of the brand new year, because the cloud continued a basic slowdown with clients searching for methods to slash payments.

“As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters. So far in the first month of the year, AWS year-over-year revenue growth is in the mid-teens,” CFO Brian Olsavsky said in his feedback to open the call.

For a division that has loved high development charges for years, mid-teens development represents a unprecedented drop, and it didn’t go unnoticed through the earnings call. Analysts have been actually curious whether or not it was a  longer term pattern, however Olsavsky actually wasn’t able to predict past this quarter.

“So on the AWS growth rate, I’m not sure I can forecast for you with any level of certainty what is going to happen beyond this quarter. This is a bit of uncharted territory economically. And as we mentioned, there’s some unique things going on with the customer base that I think many in this industry are all seeing the same thing,” he said.

It is price noting that Olsavsky also reported an annual income run price of $85 billion, suggesting that AWS stays a particularly wholesome enterprise in spite of the financial headwinds it’s dealing with. “That said, stepping back, our new customer pipeline remains healthy and robust, and there are many customers continuing to put plans in place to migrate to the cloud and commit to AWS over the long term.”

Amazon CEO Andy Jassy, who spent a superb a part of his profession on the firm working AWS, says that as clients look to cut prices, there shall be a short-term development deceleration, however nonetheless sees loads of cloud market to overcome post downturn.

“So I think it’s also useful to remember that 90% to 95% of the global IT spend remains on-premises. And if you believe that, that equation is going to shift and flip. I don’t think on-premises will ever go away, but I really do believe in the next 10 to 15 years that most of it will be in the cloud…It means we have a lot of growth in front of us in the AWS business,” he said.

Perhaps, however for a enterprise that has been a development engine for the corporate for a lot of years, the present slow-down at AWS nonetheless has to be worrying.

AWS says development dropped to mid-teens to start out new year as buyer cost slicing continues by Ron Miller initially printed on TechCrunch