Amazon Web Services Reports 40% Growth Despite Customers Looking To Other Vendors

Amazon’s cloud business reported bumper earnings on Thursday, surprising analysts following a quarter of outages and a focus by its new AWS CEO, Adam Selipsky, on keeping its corporate customers loyal.

Amazon Web Services generated $17.8 billion in the fourth quarter, reporting 40% growth year over year. With losses in other areas of Amazon’s business, including international markets, AWS generated $5.3 billion income, underscoring its importance to Amazon’s future; Amazon’s shares spike 15% after-hours.

Yet the huge earnings figures came as the cloud vendor is fighting to maintain its dominant market share. Three major outages disrupted services in the last quarter and prompted damaging headlines that reminded many of its customers of the risks of relying on a single cloud vendor.

It’s a mixed review for Selipsky, who took the helm 10 months ago, replacing Andy Jassy, who was promoted to lead Amazon as CEO. At AWS’ annual conference re:Invent conference in December, Selipsky made it clear to customers that they should stick to AWS, rather than seek multi-cloud opportunities. To highlight the point, he invited United Airlines’ chief digital officer Linda Jojo onstage, who said, after looking at other vendors, that AWS was “the only real choice for us.” In a press statement issued Thursday, AWS pointed to a slew of new customer partnerships signed in recent months, including with Meta, Goldman Sachs and Best Buy.

But Selipsky’s vision appears to go against the industry trend. Forbes reported last week that twice as many large companies are expected to spend most of their cloud budgets on Microsoft Azure. Other AWS customers, including American Express and Toyota, expressed the importance of using multiple cloud vendors. 

“Customers will continue to look for multi-cloud, which is to mitigate vendor concentration, and…workload affinity,” says Lee Sustar, an analyst at Forrester. “The next few months will determine whether or not the products Google or Microsoft have brought on to embrace multi-cloud can attract customers.” 

While AWS remains almost twice as large as its nearest competitor, Microsoft Azure, it is fighting to ward off fierce competition for enterprise clients from Azure and Google Cloud, which – even though they reported a dip in growth rates – grew faster in the fourth quarter, at 46% and 44% year-over-year, respectively.

Looking ahead, it remains to be seen whether AWS can maintain its growth rate – and market share – under its new leadership. “It’s [Adam] Selipsky’s first year, so how much of this was [Andy] Jassy’s strength?” says Scott Raynovich, chief analyst at Futuriom. “We don’t know how good he is yet.”