Yesterday, Amazon reported AWS revenue, which grew slightly by 20% year-over-year to $21 billion. But perhaps more troublingly, the company said in an earnings call with analysts that growth in the first month of the new year fell further into the mid-teens.
“Looking ahead, we expect these optimization efforts to continue to be a headwind to AWS growth for at least the next few quarters. The growth rate is in the mid-teens,” CFO Brian Olsavsky said in comments during the conference call.
For a sector that has enjoyed years of high growth, the mid-teens growth rate was an extraordinary dip that didn’t go unnoticed on earnings calls. Analysts were certainly interested in whether that was a long-term trend, but Orsavsky was unprepared to forecast this quarter and beyond.
“So I’m not sure we can predict with certainty what’s going to happen this quarter and beyond when it comes to AWS growth rates. This is uncharted territory economically. And as we said, , there are some unique things happening with our customer base that I think many in this industry see the same thing.
It’s worth noting that Olsavsky reported annual revenue of $85 billion. This suggests that AWS remains a very healthy business despite the economic headwinds it faces. “That said, we take a step back and our new customer pipeline remains healthy and robust, with a number of customers moving to the cloud who continue to make plans to commit to AWS long term. .”
Amazon CEO Andy Jassy, who spent most of his career at the company that runs AWS, is seeing a short-term slowdown in growth as customers look to cut costs, but he’s set to conquer after the recession. He said that there are still many cloud markets that should be used.
“So I think it’s also useful to remember that 90% to 95% of the world’s IT spending remains on-premises. And if you believe it, that equation will shift and flip. I don’t think on-premises will ever go away, but I really believe that in the next 10-15 years it will be mostly in the cloud, which means there’s a lot of growth ahead for AWS in the business. ” he said.
Perhaps, but for a business that has been the company’s growth engine for many years, AWS’s current slowdown is still something to worry about.
