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As Amazon Reports 4Q17, Eyes Are on Amazon Web Services

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Report says AWS shed market share

Amazon (AMZN) is due to release its 4Q17 earnings results at a time when a lot of attention is being focused on its cloud computing business. That follows a recent research note that appeared to question its dominance in the sector.

In a research note to clients reported by CNBC, KeyBanc analysts wrote that Amazon has lost share in the public cloud computing market. According to the analysts, Amazon Web Services (or AWS) had its cloud market share fall to 62% in 4Q17 from 68% a year earlier. AWS is Amazon’s cloud computing arm, which is widely viewed as a dominant force in the cloud computing sector.

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Azure’s market share expanded

As AWS shed market share in 4Q17, its rivals gained, according to KeyBanc. Microsoft’s (MSFT) Azure increased its share of the public cloud market to 20% in 4Q17 compared to 16% a year earlier. Google’s share of the public cloud market rose to 12% from 10%.

In 3Q17, Amazon reported that its AWS revenues increased 42% YoY (year-over-year) to $4.6 billion, as shown in the chart above. But growth slowed down from 55% a year earlier. Microsoft Azure’s revenue rose 99% YoY in the same period. Alphabet (GOOGL) reported that its Google segment, which includes cloud sales, grew 40% YoY in 3Q17.

Is AWS growth accelerating?

In light of KeyBanc’s comment regarding AWS losing market share, Amazon’s 4Q17 report is likely to draw a lot of attention to the company’s cloud business. With Amazon’s China-based (MCHI) e-commerce rival Alibaba (BABA) also stepping up its cloud campaigns, questions remain as to whether AWS growth can accelerate in the face of growing competition.

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