Major cloud providers in the U.S. saw year-over-year revenue growth in the fourth quarter of 2020, as pandemic-driven restrictions accelerated demand for the cloud to support essential digital solutions such as remote work and e-commerce, as well as entertainment platforms such as video streaming and online gaming.
Amazon Web Services Inc.'s revenue totaled $12.74 billion in the fourth quarter of 2020, up 28% year over year. The Amazon.com Inc. unit's full-year 2020 revenue stood at $45.3 billion, up nearly 30% year over year.
"In Q4, AWS added more revenue quarter over quarter and year over year than in any quarter in its history, and is now a $51 billion annualized run-rate business, supporting millions of active AWS customers," Amazon CFO Brian Olsavsky said during the company's recent earnings call.
AWS chief Andy Jassy is set to take over Amazon CEO Jeff Bezos' role in the third quarter of 2021. Olsavsky touted Jassy's track record of developing multiple businesses within Amazon, including turning AWS into "arguably the most profitable important technical technology company in the world."
Jean Atelsek, an analyst in the cloud transformation and digital economics unit at S&P Global Market Intelligence's 451 Research, said Jassy has been the face of AWS since the beginning and has had huge success in growing the company.
"It's not like the new guard replacing the old guard, as happened at Microsoft Corp. when Satya Nadella took over. Jeff Bezos' DNA is all over AWS," Atelsek said.
Microsoft, which is considered Amazon's closest cloud competitor, reported a 50% year-over-year increase in revenues at its Azure cloud-computing platform in the fourth quarter of 2020. The company's intelligent cloud segment, which includes Azure as well as server products, saw quarterly revenue grow 23% year over year to
Atelsek said Microsoft is making big strides with Azure's hybrid-cloud capabilities, which are especially enticing to companies that are still reluctant to shift the "crown jewels" of their data to cloud.
"Microsoft is doubling down on its incumbent position in enterprises by introducing hybrid services that are specifically oriented to data-heavy workloads," Atelsek said. "Azure also has the most ambitious plans for growing its global footprint, with announced plans to add 15 new regions, including nine in EMEA." AWS has 30 regions in total, compared to the 69 Azure has opened or announced to date, she added.
Meanwhile, Alphabet Inc. broke out its cloud business, Google Cloud, as a separate reporting segment and also started providing full-year results for 2018, 2019 and 2020. Revenues in Google Cloud rose to $3.83 billion in the fourth quarter of 2020, up from $2.61 billion a year earlier. However, the unit also posted a loss of $1.24 billion in the quarter.
"We'll continue making disciplined investments to scale the business and improve profitability," said Google CEO Sundar Pichai during the company's recent earnings call. "We continue to invest strongly in the business given the momentum we are seeing. These investments in our go-to-market organization have helped us win larger deals, including several billion-dollar deals in 2020."
International Business Machines Corp., another prominent player in the industry, saw revenue decline throughout 2020, but its cloud business remained a bright spot. Even though its cloud and cognitive software segment was down 4.5% year over year in the fourth quarter of 2020 to $6.84 billion, cloud and data platforms grew 9%, while cloud revenue was up 39%.
"IBM's mantra at the moment seems to be hybrid cloud and AI — in the earnings call transcript, this exact phrase appeared 10 times in the prepared remarks," Atelsek said. "It has work to do culturally in terms of meeting the moment for companies eager to effect true digital transformation via cloud."
Similarly, Oracle Corp.'s cloud business lifted the rest of the company, offsetting declines in smaller parts of its business. The cloud services and license support segment, which includes Oracle's subscription business as well as licenses and support services for cloud and on-premises IT environments, saw revenue grow about 4% year over year to $7.11 billion in its most recent quarter, which ended Nov. 30, 2020.
Oracle CEO Safra Catz said the company has doubled the percentage of revenue being derived from its cloud services, now reaching 73% of total company revenue. "We anticipate this trend to continue as cloud services continue to grow," Catz added.
