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 VMware How to build a successful agile development culture - and why your business needs one Mastering agile: Addressing familiar challenges and common misconceptions for successful software development. By Mike Freedman, Senior Director, and Michael Coté, Senior Member of Technical Staff, VMware Tanzu by Broadcom May 20, 2024 6 mins Devops Software Development brandpost Sponsored by Broadcom Driving digital transformation success: Serge Lucio's insights on Value Stream Management Navigating the VSM landscape: Strategies for seamless digital transformation—a chat with Serge Lucio, General Manager of the Agile Operations Division at Broadcom By Marla Schimke, Head of Product and Growth Marketing, Broadcom's ValueOps Software Division May 20, 2024 4 mins Digital Transformation feature 10 projects top of mind for IT leaders today From embracing AI to modernizing infrastructure, IT leaders are focusing more on key business differentiators, risk mitigation, emerging issues, and transforming IT to accelerate change. By Mary Pratt May 20, 2024 11 mins Business IT Alignment Data and Information Security IT Strategy opinion Assembly required: 8 myths about knowledge management debunked Business leaders intent on fostering innovative cultures must differentiate between knowledge management and knowledge assembly. One involves systems, data, and collaboration; the other, insights, dialogue, serendipity, and courses of action. By Daniel Forrester and Jerold Zimmerman May 20, 2024 13 mins Content Management Systems Document Management Systems Staff Management 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