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AWS Booms in Q3 Even as Amazon Falls Short

Amazon Web Services (AWS) continues to be the cloud market's runaway leader, earning $6.7 billion for the fiscal third quarter ended Sept. 30, in line with analyst estimates.

That represents a 9% jump from the previous quarter, when AWS revenue reached $6.1 billion.

Its parent company, Amazon.com, reported $56.6 billion in revenue overall, falling short of Wall Street estimates, which projected revenue north of $57 billion.

The AWS cloud business, however, remains a reliable bright spot for Amazon.com. It's the e-commerce giant's fastest-growing business unit, increasing by 46% year over year. By comparison, the North America and International retail segments grew by 35% and 13%, respectively, from last year's Q3.

For the quarter, AWS made up 12% of Amazon.com's total sales.

AWS operating income was $2.1 billion for Q3, up by 26% from Q2 and by 77% year over year.

AWS' closest competitor, Microsoft Azure, just had a similarly impressive quarter. Its revenues are up 76% year over year, according to Microsoft's most recent earnings report released Wednesday, though the company didn't provide a precise dollar amount.

However, the No. 2 public cloud provider is showing signs of decelerating growth. As Scott Bekker writes for AWSInsider's sister publication RCPmag: "[T]he number is slightly worrying to financial analysts, who note that the Azure growth rate figure has been marching steadily downward over the last few years. By comparison, the growth rate for the same quarter a year ago was 90%; two years ago it was 116% for the quarter."

It should be noted that while AWS' most recent Q3 showed a stronger year-over-year growth than the same period last year (which clocked 42% growth), it was also slower than Q2 (which jumped by 49%).

In Thursday's earnings announcement, Amazon.com officials spotlighted a few AWS milestones in Q3 as contributors to the cloud unit's continued growth, including:

About the Author

Gladys Rama is the senior site producer for Redmondmag.com, RCPmag.com and MCPmag.com.

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