Cloud Friday: Big three public cloud giants release results simultaneously
AWS, Microsoft and Google release quarterly results at the same time as cloud battle hots up
Amazon Web Services (AWS), Microsoft and Google released their quarterly results on Thursday, giving the clearest indication yet of how the battle for cloud dominance is unfolding.
While it is not possible to make direct comparisons between the three (only Amazon breaks out its specific cloud computing numbers), the financial reports give clear indications that the market leaders are all growing at a rate of knots.
We've pulled out the key information from all three reports, along with the accompanying earnings calls.
Amazon Web Services
AWS recorded revenue of just under $4.6bn (£3.5bn) for its Q3 ending 30 September, an increase of 42 per cent on the same period last year. Operating income increased 36 per cent to $1.2bn in the same period.
The wider Amazon business recorded sales of $43.7bn, but AWS remains the main profit driver for the group.
While AWS' operating profit was over $1bn, Amazon's as a whole was just $347m.
AWS currently has 44 "available zones" across 16 regions, with a new Middle East region and 16 new available zones slated for launch over the next two years.
The cloud division was largely overshadowed by other areas of the Amazon business on the earnings call - the likes of the recently acquired Whole Foods and Amazon Prime - but CFO Brian Olsavsky pointed to the improved run rate of the AWS business.
"Revenue growth was the same as Q2, and now we're at an $18bn run rate whereas last quarter when I had this call we were at $16bn, so [we're] very pleased with the customer response in the AWS business as well," he said.
"Usage growth is actually growing a lot higher than revenue growth so [we're] particularly pleased with the new customers we've added and the additional workloads that we've picked up from existing customers."
On the call, transcribed by Seeking Alpha, Olsavsky also alluded to tougher margins in the AWS business.
AWS' revenue growth had shrunk for eight consecutive quarters, before this quarter was flat on Q2.
"We had a number of price cuts timed around 1 December last year that certainly had an impact on Q4 of last year," he said. "Not only price cuts, but new products that have lower average cost can cannibalise more expensive products, [which] is pretty much a part of our business all the time in AWS."
Amazon's share price jumped over eight per cent in after-hours trading.
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Cloud Friday: Big three public cloud giants release results simultaneously
AWS, Microsoft and Google release quarterly results at the same time as cloud battle hots up
Microsoft
The overall Microsoft business reported a revenue of $24.5bn for its Q1 ending 30 September 2017, up 12 per cent on the same period last year. Operating income was up 15 per cent to $7.7bn.
Microsoft does not provide figures for Azure specifically, instead grouping it with the likes of Office 365, Dynamics 365 and other cloud products in a 'commercial cloud' category.
The vendor said its annual revenue run rate for commercial cloud is now at $20bn. In comparison, the run rate of Amazon's direct Azure competitor AWS alone is $18bn.
Microsoft did say, however, that Azure's quarterly revenue was up 90 per cent on the same period last year.
In terms of revenue figures, Microsoft breaks its sales into three areas: Productivity and Business Processes ($8.2bn); Intelligent Cloud ($6.6bn); and More Personal Computing ($9.4bn).
Productivity and Businesses Services includes Office 365 and other Office-related products; Intelligent Cloud includes Azure, Windows Server and other datacentre-related products; while More Personal Computing incorporates Windows 10, Surface hardware and the Xbox gaming console.
Microsoft CEO Satya Nadella said the vendor is outpacing its cloud targets, having previously expected to hit a $20bn run rate in 2018, adding that Azure usage "more than doubled" this quarter.
On an earnings call, Nadella said: "These results reflect our accelerating innovation as well as increased usage and engagement across all businesses as customers continue to choose Microsoft to help them transform."
Nadella also took a shot at AWS, claiming Azure has 42 regions globally - "more than any other cloud provider". If Azure's regions are akin to AWS availability zones, Azure would actually have two fewer than Amazon.
Microsoft shares jumped more than four per cent in after-hours trading. In the days leading up to the results, Microsoft's share price took it to a valuation of $600bn for the first time since the dot-com era.
Google parent company Alphabet reported Q3 revenue of $27.8bn for the three months ending 30 September, up 24 per cent year on year.
Google's cloud business is arguably the most difficult to judge when compared with AWS and Azure, being lumped in with the Google Play app store and hardware sales in the "other revenues" category.
This category of sales saw revenue jump 40 per cent year on year to $3.4bn - a relatively small chunk of Alphabet's overall revenue when compared with how much the cloud businesses contribute to Amazon and Microsoft.
Canalys estimates that Google saw 76 per cent year-on-year growth on its cloud business.
On an earnings call, Alphabet CEO Sundar Pichai said cloud is one of the giant's "three big bets" along with YouTube and its hardware business - adding that the largest headcount growth of all Alphabet's divisions over the last quarter came in the cloud arm.
"We continue to make progress winning over enterprise customers," he said.
"The reason we win deals in many cases is because we have superior technology and people also see the room ahead, thanks to a lead in machine learning.
"That's an area where I think we'll continue to drive advantage. The main area where we need to get better is to scale our go-to-market and be in more places to effectively get more customers."