Yesterday, both Amazon and Microsoft beat Wall Street expectations during their quarterly earnings reports. While reading many of the analysts’ reports during the evening, I couldn’t avoid noticing some key differences in the way their cloud services businesses is evolving. If is true that both companies reported very strong numbers in their cloud services business, it’s pretty clear that their current challenges and go to market strategies are quite different.
AWS: It’s Growing but not as Fast as It Was
As expected, Amazon’s AWS business continues to grow strong. For the fourth quarter, the North America Sales “Other” category — which includes AWS — hit $1.17 billion, up 52 percent from $769 million for the year-ago quarter. For the full year, AWS (or other) hit $3.72 billion, up 58 percent from $2.35 billion.
An interesting thing to notice is that, while AWS remains the clear market leader in the cloud infrastructure category, the AWS business is not growing as fast as it was a few years ago. The following chart might help to illustrate that point:
Some factors that might influence that could be the constant cost reductions in some of the services and the increasing competition from Google, Microsoft, Rackspace and others.
Microsoft: Diversity of Cloud Services Offerings
Microsoft also delivered killer numbers as part of it’s earning reports yesterday beating Wall Street expectations.
One thing to notice in MSFT report is that it’s long term investment in diverse cloud services offerings is starting to pay off. Office365 delivered a 100% growth and is now on a $2.5B. Similarly, Windows Azure revenue increased by 150%. Finally, Bing US market share is up to 18.6%
While these numbers are just based on one quarterly report, it might be an indication of two different strategies moving forward. While AWS needs to figure out new engines of growth to continue its market dominance, Microsoft will continue diversifying its cloud offering to accelerate growth.