Revenue for the third quarter of 2022 marks AWS’ slowest expansion in the last few quarters. Credit: IDG Macroeconomic conditions led by the pandemic and the geopolitical crisis in Ukraine have further slowed down growth of Amazon’s cloud computing unit, Amazon Web Services (AWS), in the third quarter of 2022. Amazon on Thursday said AWS had raked in revenue of $20.5 billion for the quarter ended September 30, up 27.5% year-on-year. However, revenue for AWS grew at 33% year-on-year at 19.74 billion in the previous quarter (ended June 30). For the quarter before that, revenue grew 36.5%. The steady decline in growth can be attributed to macroeconomic conditions, due to which the company is seeing a slowdown in customer expenditure, company executives said during an earnings call. “We do see some of the consumers are cutting their budgets and trying to save money in the short run. I would say that although we had a 28% growth rate for the quarter for AWS, the back end of the quarter, we were more in the mid-20% growth rate. So, we’ve carried that forecast through to the fourth quarter,” CFO Brian Olsavsky said, according to a Motley Fool transcript. Other factors affecting AWS growth, according to Olsavsky, were inflation in employee salaries due to stock-based compensation and rising energy costs alongside continued investments in its data centers. “We’re also seeing energy costs that are materially higher than they had in pre-pandemic, electricity and the impact of natural gas pricing. So, we’re fighting through some of that as well, which is a new thing for the AWS business. But we’ll continue to look for ways to optimize our operations to use less energy,” the CFO said during the earnings call. AWS to work with customers to lower their costs To continue its revenue momentum, AWS said it was working closely with customers to lower their costs. “When I talk about enterprise customers in AWS, yes, we’ve been working with customers to lower their bills. Just like all companies, they want to lower their spend when they’re faced with uncertainty in the market,” Olsavsky said while responding to a question on customer behavior. During the quarter, rivals Microsoft and Google have increased their cloud revenue by 35% and 38% respectively. AWS, which still leads the infrastructure-as-a-service (IassS) market, also has been gradually losing ground to these rivals, according to a report from market research firm Gartner. At the end of 2021, AWS retained 38.9% share of the market against 40.8% dominance in 2020, Gartner said. Microsoft increased its market share by 1.4% market share to 21.1%, the report showed. Google gained a percentage point, for a 7.1% share of the market. Related content brandpost Sponsored by Randstad How CIOs can use internal mobility and redeployment for successful digital transformation The role of your people is key a factor in the success of digital transformation. Find out how redeployment and talent transition experts, Randstad RiseSmart, can help organizations at all stages of the digital transformation journey. By Neal Weinberg May 28, 2024 5 mins Digital Transformation opinion Navigating the Cybersecurity Threat Landscape in the UAE: Strategies for CISOs By Andrea Benito May 28, 2024 4 mins feature 10 most difficult-to-fill IT roles — and how to address the gap With AI, cybersecurity, and data analytics talent in short supply, IT leaders are upskilling, recruiting from the business, highlighting culture, and relying on contractors to secure the talent they need. By Stephanie Overby May 28, 2024 11 mins Hiring Staff Management feature Sun Country enhances customer experience with IT The low-cost regional airline turned to IT to develop a self-service e-voucher program aimed at easing the hassles that come with flight delays and cancellations. By Paula Rooney May 28, 2024 6 mins CIO 100 Travel and Hospitality Industry Digital Transformation PODCASTS VIDEOS RESOURCES EVENTS SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe