Amazon's cloud growth might be slowing, but it's still way ahead of everybody else

Key Points
  • Amazon Web Services saw its revenue growth slip to the lowest point in three years or more in the most recent quarter.
  • AWS "continues to be the thought leader and the reference point for all competitors," according to an industry report that Gartner released last month.
Amazon CEO Jeff Bezos discusses the Fire smartphone at a news conference in Seattle, June 18, 2014.
Jason Redmond | Reuters

On Thursday, Amazon revealed that growth of its public cloud business had slowed to the lowest point in at least three years in the second quarter: Amazon Web Services revenue, at $4.1 billion, was up 42 percent year over year.

Competitors might have taken a moment to cheer immediately after the Amazon earnings release. But if there were celebrations, they were kept brief.

That's because Amazon rules the roost in cloud. It effectively pioneered the business in 2006 when it introduced services for renting out raw computing and storage resources from its data centers.

Last month, when technology analysis firm Gartner weighed in for its annual report on the public cloud market, it did acknowledge some weakness at AWS -- namely that its ability to execute on its current vision has declined -- but generally the theme was the same as always: Amazon remains the King Kong of the cloud, bigger and more ferocious than anyone else.

"AWS remains the dominant market leader, not only in IaaS, but also in integrated IaaS+PaaS, with an end-of-2016 revenue run rate of more than $14 billion," Gartner's Lydia Leong, Raj Bala, Craig Lowery and Dennis Smith wrote in the report. "It continues to be the thought leader and the reference point for all competitors, with an accelerating pace of innovation on top of an already rich portfolio of services, and an expanding impact across a range of IT markets."

Last week Microsoft said that in the second quarter its Azure public cloud business, which holds the No. 2 position in the market, brought in 97 percent more revenue than it did in the second quarter of 2016. Microsoft did not disclose Azure's revenue in dollars, although Piper Jaffray estimated that it was around $1.4 billion -- one-third of AWS' revenue.

Earlier this week Alphabet didn't report exact revenue for its Google Cloud Platform business, which holds the No. 3 position in the public cloud market, in the second quarter. What Alphabet did say is that in the quarter the cloud closed three times the number of deals exceeding $500,000 that it did in the second quarter of 2016. But again, there were no actual dollar figures for revenue, operating income or operating expenditures, making comparisons of the clouds difficult.

That didn't stop analyst firm Synergy Research Group from updating its market share numbers for the categories of infrastructure as a service, platform as a service and hosted private cloud. AWS holds 34 percent of the market, while Azure has 11 percent, IBM had 8 percent and Google has 5 percent, the firm said.

In the past four quarters AWS' market share increased by 1 percentage point, Synergy said.