Amazon Web Services has been the biggest growth engine for its parent company over much of the past decade, taking business from some of the largest tech vendors in the world. But as corporations face the most daunting economic environment since the 2008 financial crisis, those massive checks they’re writing to AWS for their tech infrastructure are getting greater scrutiny. Peter Kern, CEO of online travel company Expedia Group, sees the cloud as an area where his company can reduce its fixed costs. In recent years, Expedia has moved considerable parts of its operations to AWS from on-premises data centers. “We haven’t fully optimized the cloud,” Kern said during the company’s earnings call last month. “We’ve moved a lot of technology into the cloud, but we have a lot of work to do.”
The National Football League, which uses AWS to produce statistics and schedules, is making conservative plans around costs, said Jennifer Langton, the NFL’s senior vice president of health and innovation. “We are not recession proof,” Langton told CNBC during an interview at AWS’ annual Reinvent customer conference in Las Vegas this week. The league is negotiating with AWS on the terms of a renewed multi-year agreement, and there are some areas her organization wants to prioritize, she said. AWS is coming off its slowest period of expansion since at least 2014, the year Amazon started reporting on the group’s finances.
AWS isn’t the sole big cloud provider that’s dealing with customers’ budget constraints. In the third quarter, Microsoft’s Azure consumption growth moderated as the company helped clients optimize existing workloads, finance chief Amy Hood said in October. Amazon leads the market in cloud computing, with an estimated 39% share. “If you’re looking to tighten your belt, the cloud is the place to do it,” AWS CEO Andy Selipsky said during his keynote presentation in front of over 50,000 people on Tuesday. Selipsky said that moving IT jobs to the cloud could help budget-strapped organizations save money, citing customers Agco and Carrier Global.
Not everyone agrees. Last year, investors Sarah Wang and Martìn Casado of venture firm Andreessen Horowitz published an analysis, showing that a company could trim its computing costs by half or more by bringing workloads from the cloud back to on-premises data centers. Selipsky told CNBC’s Jon Fortt in an interview that AWS teams are working with customers that are trying to become more efficient. “We do see some customers who are doing some belt-tightening now,” Selipsky said. One example is data analytics software maker Palantir, which said last month its operating profit in the third quarter was higher than expected primarily because of cloud and deployment efficiencies.
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