In January of this year, Amazon Web Services (AWS) announced another record-breaking year for revenue. In 2018, annual revenue increased year-over-year by 47%, reaching $25.7 billion. This growth can be attributed to high-profile enterprise deals, the expansion of different product offerings, and the strengthening of numerous industry partnerships. Within that growth, however, the services AWS customers are spending their money on is not so well documented—making it difficult to identify trends in AWS spending...until now.
We analyzed the (anonymized) spending habits of more than 4,000 of our AWS customers to document changes in spending habits and observe where more than $1 billion in AWS cloud spend was going.
We looked at year-over-year change (comparing January 2018 and January 2019) across storage, analytics, serverless, containers, and more, to map real spending habits of AWS customers to help better predict where the industry is headed next.
Overall AWS spending trends
To analyze this data we segmented our customers into three categories: small or medium-sized business (SMB), mid-market (MM), and enterprise. We also looked at AWS spending data by industry to see if things like cloud maturity, business priorities, and compliance requirements affected spending habits differently.
- Small or Medium-Sized Business (SMB): Under 100 employees or less than $50 million in revenue.
- Mid-Market (MM): Between 100 and 3,000 employees, or between $50 million and $1 billion in revenue.
- Enterprise: More than 3,000 employees, or more than $1 billion in revenue.
When we analyzed how CloudHealth customers are utilizing their AWS budgets, we found that businesses of all sizes are increasing their usage of AWS services at practically every level. We identified three big swings where both (1) spend per business and (2) number of businesses using said service increased significantly. These trends included:
- Containers: Spend increased more than 6-fold year over year
- Machine learning: Spend increased 540% year over year
- Serverless computing: Increased by more than 50% year over year
Compute and reservations
It’s no surprise to find compute services dominating AWS spend, with 67% of all AWS spend being attributable to EC2 and EBS. Industries with the highest amount of spend on compute services included Technology, Media and Entertainment, and Public Sector/Education.
Overall, spending on compute services did decrease by 3% between January 2018 and January 2019 (this is actually a substantial number when you remember we’re looking at $1 billion in spend!). This isn’t to say AWS users are running less total compute, but rather businesses are moving from more traditional modes of compute infrastructure (i.e. instances) to new modes like containers and serverless (see the full eBook for data supporting this theory).
We were surprised to see how much the use of Convertible Reserved Instances (RIs) increased year over year. Our data analysis revealed that the percentage of AWS customers purchasing Convertible RIs increased from just 4% in November 2017 to 64% in March of 2019. As businesses look to find greater flexibility when it comes to purchasing reservations, we expect the ratio of customers purchasing Convertible RIs over Standard RIs to continue to increase.
...also included in this eBook
Storage and analytics
92.5% of storage spend is attributed to AWS’ S3, with Services, Healthcare, and Public Sector/Education taking the top spots of industries with the highest spend on storage (12%, 7.8%, and 7.8% respectively).
The Public Sector/Education industry also doubled their spend on analytic services between 2018 and 2019, followed closely by the Financial industry who saw similar year over year growth at just over 1.8x. Amazon Redshift, ElasticSearch, and Elastic MapReduce continue to remain the most popular analytics services, with the breakdown of spend as follows:
Serverless and containers
While AWS’s serverless computing and container services have been available since 2014, there has been only modest industry adoption. In the last year alone, serverless and container services have seen some of the industry’s fastest growth rates—our data shows there was more than a 6x increase in average spending on containers from 2018 to 2019.
Unlike containers and other cloud assets whose resources need to be reserved, serverless technology allows customers to pay on a usage basis. From 2018 to 2019, spend on AWS serverless increased by almost 50% as more and more businesses began to take advantage of the technology's cost-savings opportunities.
Read the eBook to see the full breakdown of AWS spending on serverless and container services, including spending trends segmented by industry.