Revenue of Amazon Web Services (AWS) and Microsoft Azure grew in Q4 2018 due to the rapid adoption of cloud infrastructure services.
AWS revenue grew 46 percent to $7 billion in the latest quarter. Microsoft Azure revenue rose at 76 percent to $4 billion. Key driving force for AWS and Microsoft is their growing investment in data center infrastructure, the latest Canalys report said.
“2018 was another year of rapid growth as businesses accelerated digital transformation projects and workload migration. This is set to continue in 2019, with more customers adopting multi-cloud strategies, including hybrid IT,” said Canalys Research Analyst Daniel Liu.
AWS maintained momentum due to traction from its enterprise customers, while Microsoft’s progress benefits from its long-standing hybrid IT initiatives, taken up by its existing large base of on-premises customers.
AWS has 60 cloud infrastructure locations worldwide, with another 12 under construction in Bahrain, Hong Kong, Italy and South Africa. Amazon’s Capex spend reached $26 billion in 2018, though the rate of growth slowed to 7 percent year on year.
Microsoft’s Capex rose 64 percent to reach $14 billion. Microsoft has 54 cloud regions, with another 10 being launched across Western Europe and Africa.
The investment to build interconnected cloud data centers is huge, and due to the constant pressure to optimize data center operating costs, refresh cycles are shorter as they drive innovation.
Canalys said the signs are they are currently focusing more on capacity utilization, which will be reflected in their CAPEX numbers in the first half of 2019. This will impact infrastructure and component suppliers in the short term.
Revenue for Amazon Web Services, Amazon’s cloud computing business, surged 45 percent to $7.43 billion in Q4 and reached $25.655 billion in 2018 from $17.45 billion in 2017.
Operating expenses of Amazon Web Services (AWS) was $5.253 billion in Q4 and $18.359 billion in 2018. Operating income of AWS reached $2.177 billion in Q4 and $7.296 billion in 2018.
Amazon, which generates revenue from e-commerce and AWS, posted a 63 percent jump in net income to $3 billion for the fourth quarter. Sales rose 20 percent to $72.38 billion, and a record number of shoppers signed up for the company’s loyalty club Prime in the fourth quarter.
AWS announced several enterprise customers during the quarter: Ellie Mae, Korean Air, Santander’s Openbank, and Pac-12 are going all-in on AWS; Mobileye and Guardian Life Insurance named AWS their preferred public cloud provider; Amgen will leverage AWS as its strategic infrastructure provider for the vast majority of its cloud infrastructure; and National Australia Bank announced they’ve chosen AWS as their long-term strategic cloud provider.
AWS expanded its infrastructure in 2018 to serve customers, launching the AWS GovCloud (US-East) and AWS Europe (Stockholm) Regions, and announcing plans for both the AWS Africa (Cape Town) as well as the AWS Europe (Milan) Regions. AWS now provides 60 Availability Zones across 20 infrastructure regions globally, with another 12 Availability Zones and four regions in Bahrain, Hong Kong SAR, Italy, and South Africa all coming online by the first half of 2020.