The cloud computing market may finally be set to cool off
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Wider economic pessimism may finally be impacting the cloud computing market after revenue growth at all the major cloud providers slowed down in Q2 2022.
Amazon Web Services (AWS) posted sales of $19.7 billion for its second quarter, up 33% year-over-year, but with a 37% growth rate that was lower than the previous quarter.
Google Cloud brought in $6.3 billion of revenue in Q2 2022, a 35% year-on-year increase compared to Q2 2021’s $4.6 billion revenue, but much lower than the 44% jump from Q1 2021’s $4 billion to Q1 2022’s $5.8 billion.
Why the slowdown?
The Register (opens in new tab) pointed the finger (opens in new tab)at a mixture of supply chain concerns, increased spending on infrastructure, and increased electricity bills.
Small data centers in the UK and Ireland have seen their margins significantly impacted as a result of the energy crisis, with some facilities seeing energy bills increase by as much as 50% over the last three years according to research by Aggreko. (opens in new tab)
Inability to keep up with demand also could be a factor
The Information reported that two dozen Azure data centers internationally are operating with limited capacity (opens in new tab), citing two Microsoft managers with knowledge of the issue.
What are cloud firms doing?
It seems cloud firms are doing everything they can to keep costs low and profits high.
In 2022, AWS, Google, and Microsoft all added another year to the lifecycle of their cloud infrastructures, which could lead to significant savings across the board.
In Microsoft’s case alone the move could save $3.7 billion in its 2023 financial year alone, according to its own estimates.
But despite the possibility of slower growth on the horizon, the market as a whole for cloud hosting and cloud storage looks immensely healthy.
A recent Gartner report found the cloud market grew by 41.4% in 2021 to total $90.9 billion.