AWS, Microsoft and Google Cloud face headwinds. A decline in cloud spending pressures the market segment, Reuters reports based on interviews with analysts.
Demand for public cloud services has been steadily declining for nine months, Reuters said. The trend is driven by macroeconomic conditions and a drop in COVID-19 measures. Many companies reportedly delay cloud migrations and request lower subscription fees from providers.
Analysts suspect there’s some form of saturation at play. Easily migratable workloads now reside in the cloud. Therefore, cloud providers are thought to have a difficult time convincing customers to migrate the more challenging remainder.
Gartner experts expect the cloud market of the three big providers to grow 20.7 percent this year, slightly up from 18.8 percent in 2022, but sharply down from 52.8 percent in 2021.
The revenues of providers will come under pressure. Microsoft Azure’s growth is expected to total 31 percent in the fourth quarter of 2022, the lowest growth ever for Azure. Microsoft simultaneously struggles with disappointing PC sales.
Experts expect Microsoft Azure revenue to grow 5.2 percent in the second quarter of 2023. That amounts to about €49 billion ($53 billion), the lowest quarterly revenue in six years.
AWS, which generates about a quarter of parent company Amazon’s revenue, saw growth of 24 percent in the last quarter of 2022, slightly down from the quarter before (28 percent).