When Amazon announced today that it will lay off an additional 9,000 employees, AWS employees made an exception with Amazon CEO (and former AWS CEO) Andy Jassy announcing that the cloud division would be included in today’s round. There was no.
TechCrunch says about 10% of today’s total comes from AWS. The company did not confirm those figures, instead referring to a memo to Jussie employees published this morning as the gist of the statement.
According to the memo, the reason the company is making gradual layoffs is that some managers were still assessing the division and weren’t ready at the time of the first round. “Simply put, not all teams finished their analysis in late fall. We have chosen to share these decisions with you.
Ray Wang, founder and principal analyst at Constellation Research, said Amazon had to carefully consider every aspect of its organization, and AWS was no exception. “This is part of a bigger trend for tech companies to get lean again, and Amazon has been bloated over the past few years. I do,” he said.
The company’s latest earnings report earlier last month showed growth in its cloud division slowing to 20% from more than 39% growth a year earlier. To make matters worse, CFO Brian Olsavsky telegraphed that growth was slowing further. “Looking ahead, we expect these optimization efforts to continue to be a headwind to AWS growth for at least the next few quarters. Growth is mid-teens,” he said at the time.
Given that background, the layoffs shouldn’t come as a surprise. In fact, growth in the cloud infrastructure market as a whole is slowing. After years of runaway numbers, cloud spending is curtailing and is starting to impact the market. Growth has slowed, down from 36% growth last year.
In addition, Amazon’s longtime rival Microsoft gained market share. Microsoft’s growth also slowed last quarter, but the company is growing faster and is starting to grow slowly but steadily on AWS.
