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AWS Rakes in $4 Billion Despite Signs of Slowdown

Amazon Web Services (AWS) reached another earnings high on Thursday, with the release of Amazon.com's second quarter earnings report.

The cloud unit was on track with analyst estimates, reporting $4.1 billion in revenue for the period ending June 30. That's an increase of nearly 12% from the previous quarter and 42% from the year-ago period.

However, this marks the eighth consecutive quarter of slowing year-over-year revenue growth for AWS. Its largest year-over-year jump was in Q2 of 2015, when revenue skyrocketed by 81%.

Since then, AWS has consistently broken its own revenue highs with each quarter, but at steadily decelerating rates. For a snapshot, in Q1, revenue grew year-over-year by 43%; in Q4 of 2016, by 47%; in Q3 of 2016, by 55%; and in Q2 of 2016, by 58%.

AWS' operating income for the quarter came in at $916 million, a nearly 3% uptick from the previous quarter and a 26% increase year over year. However, year-over-year growth in this line item -- which eight quarters ago was in the triple-digits -- also appears to be on the downslide.

Despite signs that its growth is beginning to level off, AWS remains its parent company's fastest-growing segment by a good margin, outpacing growth in the North America and International units by double-digit percentage points. AWS now comprises 11% of Amazon.com's total sales.

Officials highlighted several AWS milestones in the earnings report, such as its Database Migration Service, which has migrated over 30,000 databases to date.

Other highlights include this month's launch of the new GPU-optimized G3 instance type; the general availability of the DynamoDB Accelerator and Greengrass services; major customer wins like Ancestry.com and California Polytechnic State University; and the continued expansion of its datacenter infrastructure, which includes upcoming regions in Hong Kong and the eastern United States.

While AWS remains the leader in the public cloud space, it is facing increasing pressure from rival Microsoft, particularly among enterprises, where there are some indications that Microsoft's Azure platform has the market share edge over AWS.

In its own earnings report last week, Microsoft recorded a 97% year-over-year growth in Azure revenue.

About the Author

Gladys Rama is the senior site producer for RCPmag.com and senior editor of AWSInsider.net.

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