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The Sun Is Shining over Amazon’s Cloud

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Amazon owns the 800-pound cloud gorilla

Cloud computing once again emerged as a lead actor in Amazon’s (AMZN) growth story in 2Q17. Amazon Web Services (or AWS), Amazon’s cloud computing unit, is the world’s largest vendor of cloud computing services, controlling more than a third of the global market.

Microsoft (MSFT), Oracle (ORCL) and Alphabet’s (GOOGL) Google are struggling to catch up to AWS, and they are using a variety of tactics such as cutting prices of their services, acquiring strategic assets and inking strategic partnerships to bolster their competition. Microsoft recently tied up more closely with online file-sharing provider Box (BOX) in a bid to make its Azure cloud more attractive to enterprise customers.

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AWS growing faster than entire Amazon

In 2Q17, AWS posted a growth of 42%, which saw its revenues come to $4.1 billion against $4.08 billion that was expected. While AWS contributed only a tiny fraction of Amazon’s total revenue of $38.0 billion, it is Amazon’s growth and profit engine. AWS generated $916 million in operating income in 2Q17, the bulk of Amazon’s overall figure in the quarter.

AWS is also growing more rapidly than the overall Amazon business. While the cloud unit sales rose 42%, Amazon’s overall topline growth was 25%. The above chart shows AWS’s revenue growth rate.

Azure is a swifter sprinter

But bear in mind that has much as AWS continues to glow, its rival Azure from Microsoft is growing even more rapidly. Microsoft doesn’t disclose actual Azure revenues, but it said the business grew 97% in fiscal 4Q17, Microsoft’s equivalent of calendar year 2Q17.

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