Cloud slowdown hits Amazon as companies look to rein in cost
(2023/04/28)
- Reference: 1682687266
- News link: https://www.theregister.co.uk/2023/04/28/cloud_slowdown_hits_amazon_as/
- Source link:
Fears over stalling cloud services growth have hit Amazon’s share price, despite the company beating Wall Street estimates in its latest results. Microsoft and Google likewise showed better than expected cloud profit and loss accounts, perhaps indicating that such concerns are misplaced.
However, readers who spoke to The Reg have complained that cloud is getting expensive and some experience "sticker shock" after migrating from on-prem.
Net sales for Amazon group went up 9 percent year-on-year to a staggering $127.4 billion for calendar Q1 of 2023, with the company [1]reporting net income of $3.2 billion. Amazon Web Services (AWS), the ecommerce giant’s cloud division, said its sales increased 16 percent to $21.4 billion. However, its operating income was down to $5.1 billion from the $6.5 billion it reported in the first quarter of 2022.
[2]
Amazon shares initially rose following release of the results, but fell again as the company warned of a slowdown in growth for AWS during the current quarter.
[3]
[4]
Andy Jassy, CEO at the online megacorp acknowledged that customers may be holding back just at the moment, but said longer term prospects for its cloud were still looking good.
“While our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritize building long-term customer relationships both by helping customers save money and enabling them to more easily leverage technologies like Large Language Models and Generative AI,” he stated.
[5]
Microsoft likewise reported this week that its cloud division saw revenue grow by 16 per cent to $22.1 billion during its latest quarter, when compared the same period a year ago, and Google Cloud reported its [6]first ever profit with $7.4 billion of revenue and an operating income of $191 million.
According to [7]Synergy Research , while there may be some “angst” about declining cloud growth rates, the cloud sector is at least continuing to grow. The worldwide cloud market grew in value by 19 percent or more than $10 billion during the first quarter, compared with the same period last year, it said.
“Clearly the relatively weak economy has caused some enterprises to more closely review spending on cloud services, but the market continues to grow despite those challenges,” Synergy Chief Analyst John Dinsdale said.
[8]
The big three players continue to dominate the market, together accounting for 65 percent of the global public cloud services spend, a similar proportion to that reported a year ago. However, Microsoft and Google both increased their shares by a percentage point, Synergy claimed.
“We still see intention to grow investment in public cloud services in our last spending intent survey from August, and we see that holding firm as Google Cloud grew 28 percent last quarter and Microsoft Azure 27 percent,” said IDC’s senior research director in Europe Andrew Buss.
“However, there is no rush to exit the datacenter in Europe - over half of companies are private IT centric, and only 12 percent are public cloud first (including only 2 percent public cloud only),” he added.
The slowdown in cloud growth is in part due to the economic situation as businesses find their way through a weakening economy, and [9]rising cloud prices won't be helping to ease those worries.
[10]Amazon axes Halo gear as job cuts hit cloud segment
[11]Google Cloud makes its first profit, 15 years after launching
[12]China's Alibaba Cloud cuts prices in bid to lure customers
[13]Quantum computing: Hype or reality? OVH says businesses would be better off prepared
Cloud was sometimes billed by vendor salespeople as a cost-effective way for enterprises to scale up and down their IT resources as required, but according to one source it has become “SERIOUSLY expensive”.
“Whilst it’s true that cloud offers massive flexibility, that fact is used as a primary excuse to move to cloud. Except, these same managers don’t understand that software has to be extensively refactored to consume that flexibility and reduce costs. Thus, after migrating, there is massive ‘sticker shock’,” the techie, who wished to remain anonymous, told us.
Organizations just doing a “lift and shift” to the cloud are bound to hit licensing issues, according to our source. “Tenants using, say, Oracle, or SQL Server on-prem (or colo) are going to have to use that same software in cloud, and that generally comes with MASSIVE licensing constraints." They added: “there’s a reason MSFT has an [14]anti-trust case brewing in the EU”.
Earlier this year, The Register [15]reported on how project management SaaS platform Basecamp quit the cloud altogether in response to “colossal” cloud bills with AWS, claiming it would be cheaper to buy a bunch of servers from Dell and pay for a managed hosting services outfit to look after them.
However, anyone considering a similar move should [16]think carefully , as many of the same forces driving up cloud prices are also making colocation costs and operating your own datacenter more expensive as well. ®
Get our [17]Tech Resources
[1] https://ir.aboutamazon.com/news-release/news-release-details/2023/Amazon.com-Announces-First-Quarter-Results/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2023/04/26/alphabet_q1_2023/
[7] https://www.srgresearch.com/articles/q1-cloud-spending-grows-by-over-10-billion-from-2022-the-big-three-account-for-65-of-the-total
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/04/26/chinas_alibaba_cloud_to_cut/
[10] https://www.theregister.com/2023/04/27/amazon_halo_job_cuts/
[11] https://www.theregister.com/2023/04/26/alphabet_q1_2023/
[12] https://www.theregister.com/2023/04/26/chinas_alibaba_cloud_to_cut/
[13] https://www.theregister.com/2023/04/25/quantum_hype_or_reality/
[14] https://www.theregister.com/2023/03/30/microsoft_euro_complaints/
[15] https://www.theregister.com/2023/01/16/basecamp_37signals_cloud_bill/
[16] https://www.theregister.com/2023/04/11/cloud_dc_costs/
[17] https://whitepapers.theregister.com/
However, readers who spoke to The Reg have complained that cloud is getting expensive and some experience "sticker shock" after migrating from on-prem.
Net sales for Amazon group went up 9 percent year-on-year to a staggering $127.4 billion for calendar Q1 of 2023, with the company [1]reporting net income of $3.2 billion. Amazon Web Services (AWS), the ecommerce giant’s cloud division, said its sales increased 16 percent to $21.4 billion. However, its operating income was down to $5.1 billion from the $6.5 billion it reported in the first quarter of 2022.
[2]
Amazon shares initially rose following release of the results, but fell again as the company warned of a slowdown in growth for AWS during the current quarter.
[3]
[4]
Andy Jassy, CEO at the online megacorp acknowledged that customers may be holding back just at the moment, but said longer term prospects for its cloud were still looking good.
“While our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritize building long-term customer relationships both by helping customers save money and enabling them to more easily leverage technologies like Large Language Models and Generative AI,” he stated.
[5]
Microsoft likewise reported this week that its cloud division saw revenue grow by 16 per cent to $22.1 billion during its latest quarter, when compared the same period a year ago, and Google Cloud reported its [6]first ever profit with $7.4 billion of revenue and an operating income of $191 million.
According to [7]Synergy Research , while there may be some “angst” about declining cloud growth rates, the cloud sector is at least continuing to grow. The worldwide cloud market grew in value by 19 percent or more than $10 billion during the first quarter, compared with the same period last year, it said.
“Clearly the relatively weak economy has caused some enterprises to more closely review spending on cloud services, but the market continues to grow despite those challenges,” Synergy Chief Analyst John Dinsdale said.
[8]
The big three players continue to dominate the market, together accounting for 65 percent of the global public cloud services spend, a similar proportion to that reported a year ago. However, Microsoft and Google both increased their shares by a percentage point, Synergy claimed.
“We still see intention to grow investment in public cloud services in our last spending intent survey from August, and we see that holding firm as Google Cloud grew 28 percent last quarter and Microsoft Azure 27 percent,” said IDC’s senior research director in Europe Andrew Buss.
“However, there is no rush to exit the datacenter in Europe - over half of companies are private IT centric, and only 12 percent are public cloud first (including only 2 percent public cloud only),” he added.
The slowdown in cloud growth is in part due to the economic situation as businesses find their way through a weakening economy, and [9]rising cloud prices won't be helping to ease those worries.
[10]Amazon axes Halo gear as job cuts hit cloud segment
[11]Google Cloud makes its first profit, 15 years after launching
[12]China's Alibaba Cloud cuts prices in bid to lure customers
[13]Quantum computing: Hype or reality? OVH says businesses would be better off prepared
Cloud was sometimes billed by vendor salespeople as a cost-effective way for enterprises to scale up and down their IT resources as required, but according to one source it has become “SERIOUSLY expensive”.
“Whilst it’s true that cloud offers massive flexibility, that fact is used as a primary excuse to move to cloud. Except, these same managers don’t understand that software has to be extensively refactored to consume that flexibility and reduce costs. Thus, after migrating, there is massive ‘sticker shock’,” the techie, who wished to remain anonymous, told us.
Organizations just doing a “lift and shift” to the cloud are bound to hit licensing issues, according to our source. “Tenants using, say, Oracle, or SQL Server on-prem (or colo) are going to have to use that same software in cloud, and that generally comes with MASSIVE licensing constraints." They added: “there’s a reason MSFT has an [14]anti-trust case brewing in the EU”.
Earlier this year, The Register [15]reported on how project management SaaS platform Basecamp quit the cloud altogether in response to “colossal” cloud bills with AWS, claiming it would be cheaper to buy a bunch of servers from Dell and pay for a managed hosting services outfit to look after them.
However, anyone considering a similar move should [16]think carefully , as many of the same forces driving up cloud prices are also making colocation costs and operating your own datacenter more expensive as well. ®
Get our [17]Tech Resources
[1] https://ir.aboutamazon.com/news-release/news-release-details/2023/Amazon.com-Announces-First-Quarter-Results/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2023/04/26/alphabet_q1_2023/
[7] https://www.srgresearch.com/articles/q1-cloud-spending-grows-by-over-10-billion-from-2022-the-big-three-account-for-65-of-the-total
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZEvtopzoACW8-rI5cCfK4wAAABM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/04/26/chinas_alibaba_cloud_to_cut/
[10] https://www.theregister.com/2023/04/27/amazon_halo_job_cuts/
[11] https://www.theregister.com/2023/04/26/alphabet_q1_2023/
[12] https://www.theregister.com/2023/04/26/chinas_alibaba_cloud_to_cut/
[13] https://www.theregister.com/2023/04/25/quantum_hype_or_reality/
[14] https://www.theregister.com/2023/03/30/microsoft_euro_complaints/
[15] https://www.theregister.com/2023/01/16/basecamp_37signals_cloud_bill/
[16] https://www.theregister.com/2023/04/11/cloud_dc_costs/
[17] https://whitepapers.theregister.com/
Re: F.U.D.
Mr.Nobody
Here, here. Our colo has passed on double digit power increases in the last year, but it doesn't change the reality that we save oodles of money running our own environments vs public cloud.
I recently got a quote from our used hardware reseller, and the same server we bought last year is about 50% less costly this year. The gap just keeps getting wider.
NoneSuch
Cloud IS demonstrably more expensive, but the accountants love it because of the metered billing.
And, as we all know, anything accountants love is an instant hit. It's the reason your hamburgers are made of cardboard and wafer thin. Why your cereal boxes are 2/3 the size they used to be and twice the cost.
Cloud is good for Microshaft and screw the on-prem crowd. It's all well and good until the Cloud vaporizes, and one day it will. After a few weeks of downtime, people will learn the true costs of the Cloud.
Lifting and shifting to cloud is expensive - writing specifically for cloud is less so
gadsgadsgads
We've had a bunch of stuff lifted-and-shifted from on-prem to cloud and that can be expensive because the economics are different: once I buy a server it's a sunk cost and using all its CPU isn't an issue.
Our designed-for-cloud services tend to be smaller, serverless and, while we have more of them, the cost per unit is tiny. We're taking a lift-and-shift application on later this year and we believe that we can reduce its cloud costs by 90% by using the "right" set of services, rather than just hosting the thing on a big ol' EC2 instance.
The other big saving is time. I used to wait for months for hardware to become available. I had to wait a year for our production Oracle server to be installed and configured for us. I can spin up a new series of cloud services in seconds.
Write efficient SQL first
bo111
From my professional and customer experience: lots of database queries are sub-optimal and hugely wasteful. Often by orders of magnitude slower by such simple things as wrong statement order.
F.U.D.
"However, anyone considering a similar move should think carefully, as many of the same forces driving up cloud prices are also making colocation costs and operating your own datacenter more expensive as well."
Prove it. Show us an itemized list of costs for any area. I think most people are too lazy to make such a list so they choose "cloud".