The Big Three public cloud providers have reported their first set of earnings for 2023, once again focused on the ongoing impact of inflation and economic uncertainty.
The three largest public cloud providers — Amazon Web Services (AWS), Microsoft Azure, and Google Cloud — reported earnings over the past couple of weeks, all showing varying degrees of optimism about future growth prospects. Microsoft was first out of the gate, reporting on Jan. 24 cloud revenue of $27.1 billion for a 22% year-over-year gain. Google's parent company Alphabet and Amazon both reported earnings on Feb. 2. For the quarter, Google Cloud reported revenue of $6.9 billion for a 38% gain. AWS reported cloud revenue of $20.5 billion, for a 33% year-over-year increase.
"Moving to the cloud is the best way for any customer in today's economy to mitigate demand uncertainty and energy costs while gaining efficiencies of cloud-native development," Microsoft CEO Satya Nadella said during his company's earnings call.
Microsoft and Google Identify AI as a Way to Grow the Cloud
Beyond just mitigating demand uncertainty, the Big Three cloud providers are also increasingly focusing on artificial intelligence (AI) to help drive new demand.
Nadella said that as organizations choose cloud providers and invest in new workloads, Microsoft is well-positioned to capture some of the opportunity as a leader in AI.
"We have the most powerful AI supercomputing infrastructure in the cloud, and it's being used by customers and partners like OpenAI to train state-of-the-art models and services, including ChatGPT," Nadella said. "[In January], we made our Azure OpenAI service broadly available, and already over 200 customers from KPMG to Al Jazeera are using it."
"Moving to the cloud is the best way for any customer in today's economy to mitigate demand uncertainty and energy costs while gaining efficiencies of cloud-native development."
— Satya Nadella, CEO, Microsoft
Alphabet CEO Sundar Pichai also used his company's earning call to highlight the opportunities for cloud growth with AI. Pichai noted that the Google Vertex AI service is growing well as it brings AI capabilities to enterprises.
Pichai also highlighted the cloud infrastructure capabilities that Google provides to help organizations train new models.
"Our machine learning infrastructure with cloud TPU [Tensor Processing Unit] v4 Pods can run large-scale training workloads up to 80% faster than alternatives according to third-party benchmarks, which is helping customers like Bayer accelerate drug discovery," he said.
AWS Looks to Help Customers Cut Cloud Costs
Most enterprises are acting cautiously, Amazon CEO Andy Jassy said during his company's earning call.
"You see it with virtually every enterprise, and we're being very thoughtful about streamlining our costs as well," Jassy said. "When you are being cautious, you look for ways that you can spend less money."
Fundamentally though, the fact that cloud pricing is consumption-based is what Jassy sees as being key to the cloud's success during the current time of economic uncertainty.
"It's one of the advantages that we've talked about since we launched AWS in 2006 with the cloud, which is that when it turns out you have a lot more demand than you anticipated, you can seamlessly scale up, but if it turns out that you don't have as much demand as you had, you can give it back to us and stop paying for it" he said. "It's something you can't do on-premises, which is one of the many reasons why the cloud and AWS are very effective for customers."
About the authorSean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He consults to industry and media organizations on technology issues.