Amazon Web Services' run rate hits $33 billion; Microsoft, Google give chase

Amazon Web Services, Microsoft Azure and Google Cloud continue to grow their yearly run rates. (Getty Images)

While Amazon Web Services, Microsoft Azure and Google Cloud have impressive run rates, AWS is still far and away the dominant cloud provider.

Now that Amazon, Google and Microsoft have completed their latest round of financial earnings, there are some numbers out for each of their respective cloud divisions. In Amazon's second quarter earnings on Thursday, Amazon Web Services' year-over-year run rate increased from $24 billion last year to $33 billion in the second quarter.

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Similar to Microsoft Azure last week, AWS' cloud earnings growth decreased a bit in the second quarter by dropping from 49% growth a year ago to 37% this year. On the other hand, AWS' total revenue increased from $6.105 billion in the same quarter a year ago to $8.381 billion this year. Overall, AWS accounted for accounted for 13% of Amazon's total income in the  quarter

"The $9 billion that we increased our run rate by was second only to Q4 of last year as far as our history," said Amazon CFO Brian Olsavsky, according to a Seeking Alpha transcript. "So as you can tell, we've been pretty transparent with our AWS revenue and income numbers."

While AWS has been transparent about its cloud revenues, Google hasn't always been as forthcoming. In Thursday's second quarter earnings call for Google parent Alphabet, Google CEO Sundar Pichai said Google Cloud had an annual run rate of $8 billion, which doubled the $4 billion run rate it reported early last year. On the conference call, Pichai said that run rate included Google Cloud Project as well as G Suite, both of which are under the auspices of Google Cloud CEO Thomas Kurian.

"Q2 was another strong quarter for Google Cloud, which reached an annual revenue run rate of over $8 billion and continues to grow at a significant pace," Pichai said on the earnings call, according to a Seeking Alpha transcript. "Customers are choosing Google Cloud for a variety of reasons. Reliability and uptime are critical. Retailers like Lowe's are leveraging the Cloud as one of the important tools to transform their customer experience and supply chain."

On Thursday's earnings call, Pichai said that customers want the flexibility to move the cloud in their own way. Google Cloud is looking to provide that flexibility through Anthos, announced earlier this year, and other initiatives. Pichai also touted Google Cloud's ability to provide artificial intelligence and machine learning capabilities across verticals such as healthcare.

According to a story by TechCrunch, Microsoft Azure's run rate is around $11 billion. Microsoft's cloud business includes Azure, as well as cloud-based versions of Microsoft’s Office suite of software. Microsoft doesn't report exact revenue amounts for Azure, but it said last week that Azure revenue grew 64% in the latest quarter compared to the previous year. While a 64% growth rate is enviable for most companies, it was a slight deceleration from previous quarters' growth rates.

While AWS holds a large lead in the cloud space over Microsoft Azure and Google Cloud, respectively, both have been trying to gain ground AWS. Currently, AWS has 33% of the market share while Microsoft has 16% and Google has 8%, according to Synergy Research Group. In aggregate, Amazon is bigger than the next four cloud providers—Microsoft, Google, Alibaba and Tencent, according to Synergy Research Group, but the gap is closing a bit.

"Amazon is maintaining its leadership position in the market, though growth at Microsoft is also noteworthy," said John Dinsdale, a chief analyst at Synergy Research Group, in a prepared statement. "In early 2016 Microsoft was less than a quarter the size of Amazon in this market, while today it is getting close to being half the size. These two cloud providers alone account for half of all money spent on cloud infrastructure services, which is impressive for such a high-growth, strategically important market.”