AWS Growth Slows As Amazon Q1 Sales Increase To £27.6 Billion

Just like it’s chief competitor Microsoft, the cloud helped drive a sales boost of 23 percent from $29.1 billion (£22.5bn) to $35.7 billion (£27.6bn) in the first quarter of 2017.

CEO Jeff Bezos chose to attribute the gains to strong performance in the Indian market but there are signs that strong competition in the public cloud market from Microsoft Azure, Google Cloud Platform and others is slowing AWS growth.

“Amazon.in is the most visited and the fastest growing marketplace in India,” he declared. “It’s still Day 1 for e-commerce in India, and I assure you that we’ll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India.”

AWS growth

AWS posted net sales of $3.6 billion (£2.8bn) in Q1 2017, up from $3.5 billion (£2.7bn) in the previous quarter and a 42 percent increase from the $2.5 billion (£1.9bn) generated in Q1 2016, driven by the introduction of new services such as Amazon Connect.

Operating income showed a 48 percent year-on-year growth to $890 million (£687m) and operating expenses were also up from $1.9 billion (£1.4bn) in Q1 2016 to $2.7 billion (£2.1bn) in the first quarter of this year.

The only downside is that AWS’ growth appears to be slowing. The 48 percent increase in operating income is down from the 69 per cent year-on-year growth in Q1 2016, which could be down to other providers such as Microsoft closing the gap or simply a natural plateau.

In the quarter, AWS also announced plans to open a new infrastructure region in Sweden in 2018 as part of a Nordics expansion to follow on from its new London data centres and launched a cloud training programme called AWS re:Start to help plug a growing UK skills gap.

Other news

In other Amazon news, sales in North America showed significant year-on-year growth, up 24 percent from $16.9 billion (£13bn) in Q1 2016 to $20.9bn (£16.1bn) in Q1 2017, resulting in a slight rise in operating income to $596m (£460m).

However international sales weren’t as impressive, actually resulting in an operating income loss of $481 million (£371) down from a $121m (£99.5m) loss in the same quarter last year.

Despite this, Amazon has announced its intention to open a €1 billion (£873m) data centre campus in west Dublin and plans to add 5,000 full-time staff in the UK over the course of this year.

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