The content in this blog is outdated and we cannot reliably say it is still accurate with the speed in which the cloud industry moves. But don’t worry—below are more recent, up-to-date blogs.
Since it’s been almost a month since my last week in review, I wanted to let everyone know I’m making no excuses for my absence. But if I were to make an excuse - which of course I am not - I’d say my time has been consumed of late by contemplating really important questions, such as: Why would anyone use the absurd term “fog computing”? Why do I need to follow the “Arrivals” signs when departing from Logan Airport? Why does an involuntary smile form on my face upon saying the words “AWS Snowball”? Why is every tech company on the verge of obsolescence talking about IoT?
But those questions are behind me now, and I’m back in the saddle for this week’s review. April is coming to a close, which means two things: earnings season and Game of Thrones. So this week I’ll take a look at the earnings releases of the big cloud companies since, as they say in the Game of Clouds, you show revenue or you die.
House Cloudgaryen (AWS) Generates $2.6B in Q1 Revenue
The big news this week comes from the house of fire and blood (Amazon), which announced earnings after market close last night. Wall Street, which has been punishing Amazon’s stock for most of the new year, received unexpected news that the tech giant is posting another strong quarter with…(wait for it)... profits. Yes, that is the fourth straight profitable quarter from Amazon. The Street has become so used to seeing parenthesis around Amazon’s bottom line that they were beginning to think Jeff Bezos’ Montessori school didn’t teach him positive numbers. It should come as no surprise that the strong results were driven by Amazon Prime memberships - the eCommerce equivalent of selling street drugs to addicts - and Amazon Web Services (AWS). The big news was that AWS generated $2.6B in revenue with a 64% annual growth rate. That puts AWS on track for generating at least $10B in revenue this year. You don’t need to go to a Montessori school to know that’s a big number.
House Cloudrell (Alphabet) Falls Short But Remains Ambitious
Google’s parent company, the symbol formerly known as Google, announced strong Q1 earnings that unfortunately fell short of Wall Street’s expectations. Like House Cloudrell, Alphabet harbors deep ambitions to win the Game of Clouds, but falls just short in execution. While operating profits rose 21% and the company posted a $7.50/share profit, the Street had forecast a $7.96/share profit. The explanation for the drop included investments in “moonshot” projects (e.g. self-driving cars), “other bets” (e.g. Nest), and capital investments in cloud computing (e.g. opened two new data centers last month). While Google does not break out its cloud revenue in its filings, analysts estimate they are at a $500M annual run rate, growing to over $2B by the end of next year. But if you attended the earnings call, you are likely also asking yourself: why did their CFO show a picture of herself performing the yoga “wheel pose” while giving the earnings update? Was she trying to tell us she really likes yoga? Is she launching Google Yoga? Or was that some subliminal message about future earnings?
House Lannicloud (Microsoft) Revenue Drops But Cloud Grows
Last week Microsoft reported disappointing results for Q1. This surprised some, as Lannicloud are known to always pay their debts. While GAAP revenues fell 6% year over year to $20.5B, the company still delivered a $0.63/share profit, which was in line with Street expectations. This is sort of like giving your spouse a bad gift for their birthday, but telling them it will suck in advance. The good news was that Microsoft’s cloud business grew at an annual rate of 120%, which shows the continued rapid growth of Azure (although I remain mystified what Windows Server has to do with cloud revenue).
House Barathacloud’s (IBM) Struggles Continue
IBM’s stock has continued to struggle since the announcement that their quarterly earnings fell for the 16th-straight quarter. As the current ruling House of the Iron Throne, the company generated $18.7B in revenue and a profit of $2.09/share, making its year over year revenue decline troubling to Wall Street. The silver lining for IBM is in the cloud, with cloud computing revenue growing 34% to $10.8B. Like Microsoft, I’m not exactly sure what goes into the segment “Technology Services & Cloud Platforms” at IBM. But I was gratified that their earnings call was audio only, sparing me from picturing CFO Martin Schroeter doing “downward dog.”
House Cloudtell (Intel) Lets Go of 11% of Workforce
As an entrepreneur, it’s hard not to admire Intel. Like House Cloudtell, they are unbowed, unbent, unbroken. The company made one of the world’s greatest business pivots: going from a creator of memory chips to producer of the world’s first microprocessor. But mobile and cloud have not been kind to Intel, and they’ve struggled to maintain their value proposition in a world that no longer thinks about “what’s inside.” So it was not entirely surprising that Intel unveiled a plan to layoff 11% of its workforce while also announcing $13.8B in revenue this quarter (up 8% from the same quarter last year). CEO Brian Krzanich said: “We are evolving from a PC company to one that powers the cloud and billions of smart, connected computing devices.” I could be wrong, but I think he just said: IoT.
Well that’s all from the Game of Clouds this week. See you back here next week
--Joe of The Cloud Watch