Amazon Web Services (AWS) announced revenues of almost $9 billion for the most recent quarter – but growth fell on last year's totals meaning a more subdued outlook.
AWS posted $8.99bn (£7bn) for Q319 at a growth of 35% year on year – however this compares with 37% growth for Q219, and a 46% growth rate for this time last year. Amazon's cloud arm now represents 12.8% of Amazon's overall revenues, compared with 11.8% for the previous year's quarter.
Naturally, many of the analyst questions focused on the performance of AWS. Stephen Ju, of Credit Suisse, enquired around the long-term potential margins, saying it 'pretty much sold itself' to begin with and noting the sales and marketing increases with potential engineering hire downturns.
Brian Olsavsky, Amazon chief financial officer, noted the increasing importance of long-term commitment in terms of pricing. "Our margins expectations are that we will price competitively and continue to pass along pricing reductions to customers, both in the form of absolute price reductions and also in the form of new products that will in effect cannibalise the old ones," said Olsavsky.
Various new products were launched among the highlights for AWS in the most recent quarter. AWS Lake Formation, a service which helps customers build data lakes, and fully managed machine learning product Amazon Forecast were the biggest releases. In terms of news, the announcement of Amazon migrating all of its consumer databases from Oracle to AWS – complete with celebrations – earlier this month was of greatest interest.
In the previous quarter, this publication noted that large expectations accompanied large numbers. Growth had again dipped for AWS, which naturally saw pessimism from the analysts. Yet as long-time industry watcher Synergy Research noted, more than 100% growth rates could not carry on forever.
This time round, a note from Synergy was in similar tones. "I've seen some comments expressing worrries over the gradual reduction in annual growth rates but this is not a real concern," wrote John Dinsdale, Synergy chief analyst and research director. "It is a truism that as great scale is achieved, then growth rates will decline. The sequential growth in cloud service spending was around $1.5 billion in Q3, in line with the growth seen in the first two quarters of the year.
"Did someone say the market is weakening? I don't think so," added Dinsdale. "The cloud market is in rude good health."
While Amazon's results were being reported, AWS was under from a DDoS attack which took its S3 storage service, and others, offline for up to eight hours. According to an AWS status at the time: "Between 10:30 AM and 6:30 PM PDT, we experienced intermittent errors with resolution of some AWS DNS nsames. Beginning at 5:16 PM, a very small number of specific DNS names experienced a higher error rate. These issues have been resolved."
You can read Amazon's full financial report here.
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