AWS, the thriving Amazon cloud arm, has been growing rapidly for over a decade. One of the first providers of public cloud infrastructure, it has taken advantage of the first market status to become the most successful player in the space. In fact, it could be argued that many of today's startups would not have taken off without the formation of cloud companies like AWS giving them easy access to the infrastructure without having to build it themselves.
In Amazon's Most recent earnings report, AWS generated $ 11.6 billion in revenue, good for an execution rate of over $ 46 billion. That makes AWS's next milestone an execution rate of $ 50 billion, something that could be achieved in less than two quarters if it continues its pace of revenue growth.
The good news for competing companies is that, despite the size of the market and relative maturity, there is still plenty of room for growth.
While the growth of the cloud division is slowing in percentage terms as it firmly clashes with the law of large numbers where AWS must grow every quarter against an increasingly broader revenue base. The result of this dynamic is that while AWS's year-over-year growth rate is slowing over time - from 35% in Q3 2019 to 29% in Q3 2020 - the pace at which it is adding $ 10 billion shares in annual revenue is accelerating.
At this year's AWS re: Invent customer conference, AWS CEO Andy Jassy spoke about the pace of change over the years, stating that it took the following number of months to increase its execution speed of $ 10 billion increments:
Extrapolating from the above trend, it should take AWS less than 12 months to go from an execution rate of $ 40 billion to $ 50 billion. Stating the obvious, Jassy said "the growth rate at AWS continues to accelerate." He also pointed out that AWS is now the fifth largest enterprise IT company in the world, ahead of corporate supporters like SAP and Oracle.
The amazing thing is that AWS has reached its ladder so quickly, it didn't even exist until 2006. This growth rate makes us ask a question: Can anyone hope to stop AWS's momentum?
The short answer is that it doesn't seem likely.
Cloud market landscape
A good place to start is to look into the competitive landscape of cloud infrastructure to see if there are any cloud companies that can capture the market leader. According to Synergy Research, AWS remains firmly in the lead and it doesn't appear that any competitor will be taking AWS anytime soon unless some market dynamics have caused a drastic shift.
With around a third of the market, AWS is clearly the leader. Its closest and fiercer rival Microsoft has around 20%. To put that into perspective, AWS posted revenue of $ 11.6 billion last quarter compared to Azure's $ 5.2 billion result from Microsoft. While Microsoft's cloud equivalent number is growing faster at 47%, like AWS, that number has started to steadily decline as it gains market share and more revenue, and falls victim to the same law of large numbers.
