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Amazon, Google Grow as Cloud Usage Surges During Pandemic

While the major cloud providers are making more money thanks to a surge in cloud usage, Amazon's CFO emphasized that a key focus now is to help users save money and utilize only the services they need.

Both Google and Amazon reported their second quarter financial earnings on July 30, each showing the impact of the COVID-19 pandemic resulting in large growth in cloud usage and revenues.

The second quarter includes April, May and June, which all of which were heavily impacted by COVID-19-related shutdowns around the world. Google reported second quarter cloud revenue of $3 billion, up by 43% from the $2.1 billion reported in the second quarter of 2019.

During his company's earnings call, Google CEO Sundar Pichai highlighted the positive impact of the cloud during the pandemic. Pichai's comments echoed statements he made during the first week of the Google Next virtual conference on July 14.

"In the first half of 2020, technology and innovation proved to be a significant recovery mechanism for businesses," Pichai said during the earnings call. "Those who are shifting to digital and embracing the spirit to innovate are evolving and growing."

AWS Helping Customers Cut Cloud Costs

Amazon Web Services (AWS) is also seeing strong growth during the COVID-19 pandemic. For its second quarter, Amazon reported AWS cloud revenue of $10.8 billion, up from $8.4 billion in the same quarter of 2019.

"Customer usage remains strong, although growth varies across industries as a result of the COVID-19 crisis," said Amazon CFO Brian Olsavsky during the earnings call.

A key part of the strategy for AWS now is to help companies spend less on the cloud, which in some ways seems counterintuitive to helping Amazon grow. However, according to Olsavsky, it's a strategy that makes sense for Amazon as well as its customers.

"Companies are working really hard right now to cut expenses, especially in the more challenged businesses like hospitality and travel, but pretty much across the board," Olsavsky said. "We’re helping them with our sales force, looking for ways that we can help them save money."

One way organizations can save money in the AWS cloud is to scale down the usage where it makes sense. Helping users cut costs will not help Amazon's growth in cloud usage in the short run, Olsavsky said, but it will help those customers save money.

"We think that's the right thing to do, not only for their success and so they can come out of this in better shape, but also for the long-term health of our relationship with them," he said.

According to Olsavsky, the benefits of the cloud overall are being highlighted during the COVID-19 pandemic. Amazon is seeing a lot of companies that wished they had made more progress on the cloud because they’re seeing how ones that are on the cloud work with variable costs that can scale up or scale down depending on their particular situation, he said.

"They realize their on-premises infrastructure is not really flexible to go up or down, and especially in the time of sinking demand, it’s a big fixed cost for them," Olsavsky said. "So we expect that we'll see migration plans accelerate."

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