[ad_1]
The world’s top three cloud service providers, Amazon Web Services from Amazon.com Inc, Azure from Microsoft Corp and Google Cloud from Alphabet Inc, have seen demand for their services increase.
In particular, the maximum daily use of Google’s Meet video conferencing tool has increased 30-fold since January, while the number of daily users for Microsoft’s Teams chat system has more than doubled to 75 million since early March. .
But at the same time, companies have seen a drop in new contracts from big clients for server storage and to review technology, company executives and analysts said this week. Bulk multi-year deals typically account for more of the revenue than workplace software contracts like Teams and Meet.
Delays in setting up new servers and generous free trial offers also limited sales growth in the first quarter.
For example, Microsoft said it limits the amount of cloud computing that new customers could consume due to equipment shortages due to crashes.
“We are generally using servers and infrastructure that we had already purchased … because the ability to get tons and tons of new servers with the supply chain outside of China was limited,” Amy Hood, chief financial officer at Microsoft, told Reuters. an interview.
The cloud provider sector saw first-quarter revenue growth of approximately 34%, less than 37% growth in the fourth quarter, according to research company Canalys. He added that there had been little change in market share for the top three in the $ 31 billion global industry.
“Investment in the cloud in the hardest hit vertical segments, such as hospitality, aviation, construction, tourism and manufacturing, is being reduced or delayed,” Canalys said in a report on Thursday. “This has offset some of the short-term growth for the quarter.”
It is not yet clear if cloud providers see a boost to overall pandemic revenue growth in the current quarter or later this year.
Businesses and governments have started to move from implementing emergency measures to preparing for the reopening in the coming months, but their virus-affected budgets could cut spending and force cloud providers to extend gifts.
Market researcher IDC last week lowered its forecast for global IT spending in 2020 to a 2.7% decrease compared to a previous estimate of a 3.6% increase due to the pandemic.
DELAYS AROUND
Microsoft Azure, which is number 2 in cloud revenue after Amazon Web Services, saw its sales growth rate slow down further, with 59% in the first three months of the year from 62% in the previous quarter. , showed company data.
One of Microsoft’s biggest sources of revenue is large companies that tackle complicated technology issues, such as moving entire systems of financial software to the Microsoft cloud from their own servers.
Microsoft executives said this week that while large companies like Anheuser Busch InBev NV continue these migrations, the growth in consulting revenue that often accompanies these complex projects slowed as clients postponed the projects.
Up to a fifth of Microsoft’s cloud revenue could face volatility in the next quarter due to those delays, the company said.
Google Chief Executive Sundar Pichai also said this week that it is taking longer to close cloud deals, but did not offer a revenue guide.
In the first quarter, Google Cloud revenue, which includes sales of storage services and workplace software, grew 52% year-over-year compared to 53% the previous quarter.
John Dinsdale, chief analyst at Synergy Research Group, said that while some shoppers are lingering, their plans to adopt more cloud services have not changed.
“The signals from the major cloud providers are still very positive,” he said by email.
Amazon, which saw Amazon Web Services revenue growth drop to 33% in the first quarter from 34% in the previous quarter, noted an increase in customers’ future spending commitments as evidence that their business remains healthy. .
But the pandemic-related constraints and shortages can hamper future income growth. Google said it could face delays in developing new data centers, and Microsoft’s Hood told Reuters that delays in building the data centers will persist.
“We will simply follow government guidelines and return to construction when it is safe to do so,” Hood said.
[ad_2]
