Amazon Q2 earnings show competition isn’t slowing down Amazon Web Services

Amazon Web Services boss Andy JassyMatt Weinberger

• Amazon announced its quarterly earnings on Thursday showing off what looks like unstoppable growth for its cloud computing unit, Amazon Web Services. 
• AWS reported a 49% jump in sales over the year-ago quarter and a corresponding leap in operating profit.
• It also showcased some bragging-rights-worthy new customers.
• And it all happened while Google was in the midst of its own big annual cloud computing conference, in which it tries to convince the world that it’s ready to eat AWS’s lunch.

Even while Google was hosting its major cloud computing conference in San Francisco this week, the 800-pound gorilla of the cloud market, Amazon Web Services, dropped a bombshell.

That bombshell was Amazon’s quarterly earnings report in which it reported some stellar numbers for AWS. Sales grew 49% from the year-ago quarter to $6.11 billion, and operating profit grew too, to $1.64 billion, up from $916 million.

Plus, AWS got to brag about other important successes. For instance, AWS reminded everyone that it does have customers in the retail industry and that it just landed Zulily this quarter (a deal announced in June).  Zulily is a Seattle based ecommerce site best known for its deals on women’s and kids clothes.

This deal is Amazon’s way of saying that not every retailer is shunning it. Other retailers won’t use AWS because parent company Amazon is a threat to them. In fact, Google Cloud CEO Diane Greene rather proudly announced this week that Target was a Google Cloud customer.

Beyond a new retail customer, Amazon also noted that it scored two more companies that are ditching their own data centers to go “all-in” on AWS, Irish airline Ryanair and video game company Epic Games, the maker of the wildly popular Fortnite game.

Data by the truckload

Amazon now has a growing roster of large enterprise companies that have decided not to renew the leases on their own servers, networks, storage and data center space and instead put all their software and data in AWS. 

Amazon/Business InsiderAmazon even invented a system called the Snowball, a device that can vacuum up 100 terabytes of data at a time, to help companies unplug all or part of their private data centers and transfer data to Amazon’s. If that’s not enough, Amazon will rent them a semi-truck called the Snowmobile that can literally transfer a truckload of data at a time. 

Microsoft, with its long history of serving big enterprise business, likely has some customers that have also gone all-in on its cloud computing service, Azure. But we don’t hear much about those companies. Microsoft is widely considered the No. 2 cloud player behind Amazon. It makes most of its cloud money selling online software, like Office 365. Where it competes head-to-head with Amazon, Microsoft is better known for what’s known as “hybrid computing” where companies use the cloud for some of their IT needs and their own data centers for others.

Microsoft still makes a lot of money selling data center software to its customers, like server operating systems and databases. In fact it lumps that software into a business unit called “intelligent cloud” and it doesn’t report Azure revenue numbers separately.

Meanwhile Google has yet to show off any large companies that have ditched their data centers for its cloud, although it is starting to showcase an impressive roster of big companies that are using its cloud for one reason or another. 

All this to say that, for all the saber rattling and trumpet blowing of Amazon’s closest cloud competitors, Amazon remains in front. And with every large company that unplugs and goes all-in on Amazon, its lead grows even stronger.