Oh dear, AWS. Cloud growth slowing as customers get a dose of cost reality
- Reference: 1674132209
- News link: https://www.theregister.co.uk/2023/01/19/cloud_growth_slowdown_as_customers/
- Source link:
In a [1]report published this week, the institute said that AWS reported a quarter-on-quarter revenue increase of 27.5 percent for Q3 2022, this is down from 33 percent in Q2 — which it noted was "the slowest growth in its history."
Yep, 35% growth is 'disappointing'
Meanwhile, Microsoft's CFO Amy Hood pointed out Azure could see revenue growth decline in their next quarter, following disappointing 35 percent growth in the three months to September 2022. The tech giant reports its fourth fiscal quarter of 2022 on 24 January.
Google's cloud growth was up to nearly 38 percent in [2]Q3 of 2022 , from 30 percent in Q1, this is down from a high of 58 percent in Q1 of 2021. While these figures would represent staggeringly positive growth in any other industry, among cloud providers they represent a mood change.
AWS, for example, seen revenue increase by 30 percent to 40 percent every year since 2014 (when it recorded an 80 percent jump in turnover). Microsoft Azure and Google have reported similar digit digit gains in recent times.
[3]
The Uptime Institute attributes the slowdown to economic realities. Cloud buyers are seeing higher energy costs together with other kinds of inflation, making them cautious about spending money.
[4]
[5]
"Cloud development projects are no different from many others and are likely to be postponed or deprioritized due to rising costs, skill shortages and global uncertainty," the report says.
"Public cloud is not always cheaper than on-premises implementations, and many organizations may have concluded that migration is just not worthwhile in light of other financial pressures," the institute adds.
[6]
Meanwhile, organization already running a significant chunk of their systems in the cloud were looking to save money by optimizing workloads and costs in the cloud.
"Hyperscaler cloud providers, which are more interested in building longer-term relationships than in deriving higher gross margins in the short term, offer tools to help users reduce expenditure. These tools have improved significantly over the past few years," the report says.
While the combined effect of slowing growth and cost-savings was hitting cloud providers — [7]AWS's Q3 2022 gross margin was 26 percent, down 3 percent down on Q2, some of which was down to rising energy costs.
[8]
"While the days of 40 percent revenue jumps may be over, this recent downturn is unlikely to be the start of a rapid downward spiral. AWS's Q3 2022 revenue growth may have shrunk in percentage terms: but it was still in excess of $4 billion," the report says.
Meanwhile, this week, [9]Gartner forecast software spending, of which cloud is a component, would enjoy 9.3 percent growth through 2023.
Speaking to The Register , John-David Lovelock, distinguished VP analyst at Gartner, said businesses were finally catching on to the idea that the cloud was not necessarily cheaper than in-house or third-party datacenters for all workloads.
[10]Enterprise IT giant layoffs happened because 'some CEOs got ahead of their skis'
[11]Google Cloud (over)Run: How a free trial experiment ended with a $72,000 bill overnight
[12]What the heck is FinOps? It's controlling cloud spend – and new report says it ain't easy
[13]What's driving the multicloud? War, regulation, and plague, says Acronis CEO
"Workloads that are data intensive rather than compute intensive don't go well in the cloud. This has been known for 10 years. So, if it's taking you a million-dollar-a-month lesson to learn it, sorry. But if that's what it takes for you to learn the lesson, terrific. You've learned it," he said.
Nonetheless, it is unclear whether the message is getting through to the UK government. In a Parliamentary hearing this week, top civil servants in charge of migrating central government ERP to the cloud seemed convinced of the savings they would create.
"We have built… the understanding that a lot of the savings do not come only from commercial re-procurement and moving to the cloud; they also come from more standardisation," Alex Chisholm, chief operating officer for the civil service and permanent secretary for the Cabinet Office, [14]told MPs . ®
Get our [15]Tech Resources
[1] https://journal.uptimeinstitute.com/reports-of-cloud-decline-have-been-greatly-exaggerated/
[2] https://www.theregister.com/2022/10/26/google_reviewing_every_project_after/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y8l3RKQC0yvVZY61gjS0YwAAAEg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y8l3RKQC0yvVZY61gjS0YwAAAEg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y8l3RKQC0yvVZY61gjS0YwAAAEg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y8l3RKQC0yvVZY61gjS0YwAAAEg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://ir.aboutamazon.com/news-release/news-release-details/2022/Amazon.com-Announces-Third-Quarter-Results/default.aspx
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y8l3RKQC0yvVZY61gjS0YwAAAEg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/01/18/enterprise_vendor_layoffs_because_some/
[10] https://www.theregister.com/2023/01/18/enterprise_vendor_layoffs_because_some/
[11] https://www.theregister.com/2020/12/10/google_cloud_over_run/
[12] https://www.theregister.com/2021/02/10/finops_controlling_cloud_spend/
[13] https://www.theregister.com/2023/01/19/hyperlocalization_of_it_infrastructure_is/
[14] https://committees.parliament.uk/oralevidence/12523/default/
[15] https://whitepapers.theregister.com/
Re: AWS is the home of Hackers
Just trawl github or pastebin for a short while, won't take long to find some AWS creds on a big fat account, spin up some EC2s for a a few hours on someone else's dime and the scum use it beat the crap out of some poor sod's website using huge fat pipes AWS has to offer.
Re: AWS is the home of Hackers
I dont think hackers would positively affect AWS revenue stream. I think many "hackers" will use stolen credit cards to sign up for accounts and abuse AWS until they get shut down and do it again. I imagine hackers are costing AWS a LOT of cash, not the other way around
Re: AWS is the home of Hackers
It's hilarious that you think they don't get that cost back through all of their customers.
Re: AWS is the home of Hackers
I did the same thing a while back.
So basically what most sane techies saw about 5 years ago, that sooner of later the novelty of the cloudy future would wear off. Sure were a lot of PHBs who bought into the "cloudyt utopia" without thinking about the beating they'd get sooner or later from the reality bat!
Quelle Surprise
Anyone with any sense could see this happening but the people with sense don't make the decisions. You just get senior muppets who have just come back from some seminar/conference jolly asking "why are we not in the cloud yet? All the other muppets I talked to said they have done it."
Of course future conversations of "how could we have been so wrong" won't happen at similar events as that admits failure.
Re: Quelle Surprise
Ten years ago the CEO/owner kept telling our VP of operations that we had to be in the cloud, even though we have nothing but saas applications we offer to customers (we were cloud before it was cloud).
We were marched to create a non-functional DR solution in the cloud that has cost (which everyone in the know said wouldn't work and would cost more) 5x what the on prem functional solution costs in other continents.
CEO/owner and VP are all gone. We are still paying for a non-functioning solution because?
Re: Quelle Surprise
> We are still paying for a non-functioning solution because?
Institutional inertia. In physics, it's called "the irresistible force."
Maturing Market?
Perhaps we are reaching the point were all the easy wins and quick sales have ended. The easy stuff is now in the cloud, those remaining either don't want to lose control of their systems, cannot afford the shift or have looked at what has happened and made the decision, "no thanks".
Quite how 35 percent growth in the three months to September 2022 can be disappointing just goes to show how bent the entire market is.
Re: Maturing Market?
^^^. I thought the same thing, market saturation... There are enough cloud providers, and those customers who wanted it, have it already. I wouldn't be surprised to see these 30+% growth figures dip significantly in the coming years.
Will it be the mongrels fighting for the scraps?
Clouded vision
I realise that I hold minority opinions, but doing stuff remotely on other people's silicon has always seemed a dotty idea to me - making things overly complicated, and adding risk, for not much return as far as I could see. Perhaps others are coming round to the same opinion...? One can only hope.
I hope the UK government wises up. (Not holding my breath)
AWS is the home of Hackers
I run a small website and in the past few months, the site has had numerous hack attempts (almost a DDOS but not quite) all from IPs 'owned' by AWS.
There are even sites on EC-2 that do nothing more than slurp every page on your site. Amazon is just not interested in stopping them after all, it could affect their revenue stream.
I have filed numerous abuse reports and TBH, some have been fobbed off by AWS.
As a result, I have just blocked ALL of the AWS IP addresses on my firewall.
Amazon in its entirety can go take a hike over the nearest 1000ft cliff.