Amazon Web Services (AWS), the Cloud arm of retail behemoth Amazon, has become a $43 billion annualized run rate business, up nearly $10 billion in run rate in the last 12 months.
According to Brian Olsavsky, Chief Financial Officer at Amazon, the companies are realizing that their on-premise infrastructure is not really flexible to go up or down.
"Especially in the time of sinking demand, it's a big fixed cost for them. So we're seeing migration plans accelerate. They're certainly not going to happen overnight, but we see companies moving more in that direction," he said during the company's earnings call.
The average contract length is over three years now for the AWS contracts.
According to Olsavsky, they are also seeing a lot of companies that are really wishing that they had made more progress on the cloud "because they're seeing how companies that are on the cloud can turn into a variable cost and either scale up or scale down depending on their particular situation".
Meanwhile, led by infrastructure offerings and data and analytics platforms, Google Cloud has hit $3 billion in sales for the second quarter, up 43 per cent year-on-year.
The Google Cloud Platform (GCP) maintained the strong level of revenue growth it delivered in the first quarter, and its revenue growth was again meaningfully above cloud overall.
"The GCP growth was again led by our infrastructure offerings and our data and analytics platform. Overall, the lower Google Cloud revenue growth in the second quarter relative to the first quarter reflects the fact that G Suite lapped a price increase that was introduced in April last year," explained Ruth Porat, CFO, Google.
"G suite maintained healthy growth in average revenue per seat as well as in seat growth, which does not include customers who took advantage of our free trials as they shifted their employees to work-from-home," he told the analysts after announcing the quarterly results.
According to Alphabet and Google CEO Sundar Pichai, in the first half of 2020, technology and innovation proved to be a significant recovery mechanism for businesses.
"Those who are shifting to digital and embracing the spirit to innovate are evolving and growing," he said.
"Customers are choosing Google Cloud to either lower their cost by improving operating efficiency or to drive innovation through digital transformation,"Pichai added..