Amazon’s, Microsoft’s Cloud Wars Truce Boosts Revenue – Investopedia

Major technology firms, Inc. (AMZN), Google (owned by Alphabet Inc (GOOGL)) and Microsoft Corporation (MSFT) have been enjoying notable growth in cloud revenue at a time when they have largely stopped cutting prices for these services, according to research conducted by RBC Capital and reported on by The Wall Street Journal. In contrast, both Google and Microsoft cut prices notably during the first quarter, RBC Capital analysts had stated. (For more, see also: Amazon, Microsoft Still Rule Cloud; Oracle, Alibaba May Catch Up.)

Google’s Strong Results

While Alphabet Inc. does not provide specific figures for cloud computing, the “other” revenues section, which includes cloud services, rose more than 42% year-over-year during the second quarter, according to an earnings report released July 24. These “other” revenues accounted for more than one-tenth of the company’s $26 billion in quarterly revenue.

Industry Growth

Wall Street analysts are hoping that Amazon will report similar results, predicting that the company’s Amazon Web Services subsidiary, which provides cloud computing services, will report a 41% year-over-year increase in revenue during the second quarter, The Journal reported. Microsoft has already reported favorable results in this area, revealing that its Azure business almost doubled its revenue in the second quarter when compared to the same time last year. (For more, see also: Microsoft Stock Soars on Azure Cloud Growth.)

Significant Opportunity

Even though these major technology companies have been enjoying notable growth in their cloud business, there could be significant potential for further gains in revenue, according to The Journal. Currently, businesses spend a mere fraction of their IT budget on the cloud. Brent Bracelin, a managing director at KeyBanc Capital Markets, has estimated that last year, the largest cloud computing platforms accounted for a meager 5% of enterprise technology spending.


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