when it comes to cloud growth, it’s probably safe to say the sky isn’t falling, even though income growth rates have been. We saw aggregate public cloud revenue growth decline from 32% in the first quarter of last year to 19% this year. It’s a pretty steep descent and shows that the cloud has experienced some headwinds.
As a result, we’ve seen people talking about a big repatriation where cloud workloads will move back to on-premises, but the evidence doesn’t suggest that’s happening. Instead, companies may be slowing migrating to the cloud as they search for the most efficient way to distribute their workloads.
Clearly, companies have learned that not all workloads are a good fit for the cloud. Some that can’t handle even a little bit of latency getting to the cloud and back, for example, need to stay at the edge to be closer to the compute source. But it doesn’t seem like many IT departments are eager to return to the days of stacking and stacking new servers.
So why is public cloud growth slowing? Customers have begun to look at their hefty cloud bills, with budgets coming under increasingly intensive review this year, looking for ways to cut costs, something Amazon CFO Brian Olsavsky acknowledged on the call from company earnings with analysts this week.
“Enterprise customers continued their multi-decade shift to the cloud while working closely with our AWS teams to painstakingly identify opportunities to reduce costs and optimize their work,” he said on the call. For the CFO, that means they’re not abandoning the cloud, they’re taking a look at expenses, which is having a pretty significant impact on the company’s cloud growth numbers.
He added that the growth slowdown could continue for a couple more quarters, but that customers are generally still in the cloud. “So far in the first month of the year, year-over-year AWS revenue growth is in the mid-teens. That said, taking a step back, our new customer portfolio remains healthy and robust , and there are many customers who continue to put plans in place to migrate to the cloud and make a long-term commitment to AWS.”
By now, the cloud’s value proposition, regardless of vendor, is clear. It allows a level of flexibility that simply isn’t possible when running your own data center, and running your own data center is expensive and requires a completely different skill set than running workloads in the cloud .
So what does all this mean for revenue growth in the cloud infrastructure market? If the data is correct, it will be fine. It just seems a bit risky in the short term.
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As businesses of all sizes look for the most cost-effective ways to stay competitive and cost-efficient, cloud spending is increasingly becoming a priority for CIOs. As a result, CIOs are projecting much more spending for cloud computing going forward.
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CIOs have recognized the potential of cloud to help them remain competitive, and their projections for cloud spending continue to rise. By investing in the right cloud solutions, CIOs can use their cloud-based resources to drive their businesses forward. Ikaroa, a full stack tech company, can help CIOs make smart decisions about their cloud investments and get the most out of the cloud.
