Amazon Web Services has been the biggest growth engine for its parent company over the past decade, taking business from some of the world’s largest technology vendors.
But as corporations face the toughest economic environment since the 2008 financial crisis, the massive checks they’re writing to AWS for their tech infrastructure are coming under greater scrutiny.
Peter Kern, CEO of online travel company Expedia Group, sees the cloud as an area where his company can reduce its fixed costs. In recent years, Expedia has moved a considerable portion of its operations from on-premises data centers to AWS.
“We haven’t fully optimized the cloud,” Kern said during the company’s earnings call last month. “We’ve moved a lot of technology to the cloud, but we have a lot of work to do.”
US stocks are set to end their worst year since 2008. central bankers continue to do so raise interest rates To address rising prices, fostering skepticism about the economic fallout by consumers and businesses. Officials are in cash-conserving mode to appease Wall Street and ensure they are in position to weather a potential downturn.
Jennifer Langton, the NFL’s senior vice president of health and innovation, said the National Football League, which uses AWS to create statistics and schedules, is making conservative plans around cost.
“We are not recession proof,” Langton told CNBC during an interview at AWS’ annual Reinvent customer conference in Las Vegas this week. He said the league is in talks with AWS over the terms of a new multi-year agreement, and there are some areas his organization wants to prioritize.
Amazon knows the challenges customers are facing. In some cases, Amazon cloud employees reach out to customers to see how it can help optimize spend, said David Brown, AWS vice president responsible for the core EC2 computing service. Other times, customers contact AWS, he said.
aws is shutting down slowest period of expansion At least since 2014, the year in which Amazon began reporting on the conglomerate’s finances. It also missed analysts’ estimates. Nevertheless, the division registered a growth of 27.5%, which is very Amazon’s overall growth of 15%. And it generated operating income of $5.4 billion, accounting for more than 100% of profit for its parent company.
With such a large cash balance, AWS can accommodate customers in the short term if it means more business in the future. The company did the same during the pandemic in 2020, when Amazon sent an email to some users offer of financial aid,
AWS isn’t the only big cloud provider dealing with customers’ budget constraints. in the third quarter, Microsoft’s Finance chief Amy Hood said in October that Azure consumption grew as the company helped customers optimize existing workloads. Amazon leads the market in cloud computing Estimated 39% share,
“If you’re looking to tighten your belt, the cloud is the place to do it,” AWS CEO Andy Selipsky said during his keynote presentation Tuesday to more than 50,000 people. Selipsky said moving IT jobs to the cloud could help budget-strapped organizations save money, citing customers AGCO And Carrier Global,
Not everyone agrees. Last year, investors Sarah Wang and Martin Casado of the venture firm Andreessen Horowitz published One analysis shows that a company can cut its computing costs by half or more by moving workloads from the cloud back to on-premises data centers.
Amazon is trying to give customers options to reduce costs. it offers Graviton computing example Based on energy-efficient ARM-based chips, a less expensive alternative to instances using standard amd And intel Processor.
“Customers of every size have adopted Graviton, and they are achieving up to 40% better cost performance just by moving their workloads to Graviton instances,” Selipsky said. he said AT&TU.S.’s DirecTV unit was able to eliminate 20% of computing costs by adopting current-generation Graviton chips.
selipsky Told CNBC’s John Forte said in an interview that the AWS team is working with customers who are trying to become more efficient.
“We see some customers that are doing some belt tightening now,” Selipsky said. An example is a data analytics software manufacturer PalantirWhich said last month that its operating profit in the third quarter was higher than expected, mainly due to cloud and deployment efficiencies.
Other companies are in practice. NetApp And Vmware Has acquired startups to help businesses streamline their cloud spend. On the ReInvent exhibit floor, several companies were touting their cost-trimming capabilities.
Zesty, Joe announced Added Sainsbury’s and Silicon Laboratories to its client list in the current quarter, with a $75 million funding round in September. The company’s technology can automatically adjust the amount of storage space the company is using to avoid waste.
CEO Maxim Melamedov said Zesty picked up a bunch of new leads at its Revent booth, where the startup was handing out candy, socks and stuffed animals and offering visitors a chance to win AirPods.
“Some of my people lost their voices,” said Melamedov. “We’re 15 people constantly on our feet. We’re constantly talking.”
watch: AWS CEO Adam Selipsky on slowing economy, impact of cloud consumption