Amazon Web Services continues to dominate the cloud market, with revenues growing 39.5 percent year-over-year in the last quarter, despite fears its sheer scale would make such growth hard to maintain.
Microsoft also saw its Azure revenue jump, but did not break out specific numbers. Analysts at Synergy found that the company was able to increase its market share, solidifying itself as the de facto second provider.
Trailing them in a respectable third place was Google, which is still losing billions to operate a cloud business.
AWS: The big dog
AWS revenue jumped to $17.8 billion during the fourth quarter of 2021, even in a quarter with several high-profile outages. AWS generated $5.3 billion income - which helped nudge the overall company into a profit.
Without its cloud division, Amazon would have posted a $1.8 billion operating loss, thanks to losses in Amazon’s international segment and the added costs of labor shortages, inflation, and supply chain issues.
“On the growth rate, I think it’s a combination of things," Amazon CFO Brian Olsavski said in an earnings call. "We’ve been adding resources in sales and marketing over the last two years, and that is starting to pay off."
Azure: Number two
Microsoft only reports its 'Intelligent Cloud' revenue, which lumps Microsoft Azure in with Microsoft 365 and other productivity tools, making a direct comparison to AWS difficult.
That overall segment was up 26 percent, to $18.3 billion.
“We have more data center regions than any other provider,” CEO Satya Nadella said. “We are extending our infrastructure to the 5G network edge, helping operators and enterprises create new business models.”
In an earnings call, CFO Amy Hood said that "capital expenditures including finance leases were $6.8 billion, up 25 percent year-over-year, lower than expected, primarily due to quarterly spend volatility in the timing of our cloud infrastructure buildout."
Hood also said that she expected Azure to be up sequentially next quarter.
Synergy Research estimates that Microsoft has increased its market share by almost nine percentage points since the end of 2017, reaching 21 percent in the fourth quarter. Amazon continues to hover around the 32-33 percent mark.
GCP: Third place
Next is Google, with a less than 10 percent share, per Synergy.
This position was gained at great expense - the division lost $840 million in the quarter, and $3.1 billion in 2021. Still, that is its best performance since Google started disclosing the number in 2018 (when it lost $4.3bn, followed by $4.6bn, and $5.6bn in 2020).
Some of the costs were offset by Google's decision last year to increase the useful life of servers from three to four years, as well as add up to two years to networking kit so that it lasts as much as five years before costly refreshes.
Revenue growth for Google Cloud was up 45 percent for the quarter, year-over-year, to $5.54 billion.
"Alphabet's backlog increased more than 70 percent to $51 billion, most of which is attributed to Google Cloud," CEO Sundar Pichai said.
"This growth comes from many leading businesses, including Albertsons and LVMH; digital natives, including Box and Spotify; and public sector agencies, including the Commonwealth of Massachusetts, the Defense Innovation Unit, and the USDA."
He added: "Our sales force, which we have more than tripled since 2019, delivered strong results across geographies, products and industries, and we continue to invest. For the full year 2021, compared with the full year 2020, we saw over 80 percent growth in total deal volume for Google Cloud Platform and over 65 percent growth in the number of deals over $1 billion."
While that growth has not translated into profit for Google Cloud, the company can afford the losses - with ad revenue surging 33 percent, the company posted $20.64bn in profits for the quarter, and $76 billion for the year.
“It is a strong testimony to the value and attractiveness of cloud services that the 2021 market growth rate actually exceeded 2020 growth, despite the enormous scale that has already been achieved. Enterprises are now spending twice as much on cloud services as they spend on their own data centers,” John Dinsdale, chief analyst at Synergy Research Group, said.
“Meanwhile the battle for market share is getting more interesting. Amazon continues to lead by a wide margin, but Microsoft, Google, and Alibaba all continue to grow more rapidly. Microsoft’s market share is making impressive gains and is now just eleven percentage points behind Amazon. The rising tide continues to lift all boats, but some are being lifted more swiftly than others.”