Is the Cloud Computing Market Heading Towards A Lull?

August 23, 2022

Though cloud computing seems to have been immune to the pessimism surrounding the global economy, particularly since the pandemic, it would appear as though things have finally caught up to the booming tech market, evidenced by results collected from Q2 of the 2022 financial year.

King of the cloud computing world, Amazon Web Services, while still recording incredible sales – this year over 19.7 billion for this quarter, a 33% increase upon last quarter – the Jeff Bezos-led giant recorded a lower growth rate (37%) when compared to last quarter.

Google Cloud, which recorded $6.3 billion in revenue in the aforementioned quarter, representing a 35% increase over its 2021 second quarter, has slowed its growth as well, as its current growth is 44% less than the leaps it made in previous quarters, $4 billion to $5.7 billion, spanning quarter 1 of 2021 and 2022 respectively.

Why has the market slowed down?

Supply chain issues have been fingered to be the primary culprit in this hit on the market, with infrastructure proving to be more expensive, as the costs of utilities continue to be on the rise.

As electricity bills see spikes as high as 50% in data centres in places like the UK and Ireland, they have had to drastically adjust their margins. According to Aggreko, this gradual spike occurred over the last three years and could continue if conditions are not stabilized.

Given the above, it is reasonable to assume that failure to meet demands has also impacted the market. That was the point reinforced by findings coming out of more than two dozen internationally operated data centres for Azure, whose woes can primarily be attributed to limited capacity, according to some Microsoft executives.

Can cloud firms help the situation?

They seem capable of softening the blow somewhat. This year, in a move that will result in significant savings for them, AWS, Google and Microsoft all added an extra year their cloud infrastructure life cycles. In Microsoft’s case, for example, as a result of the previously mentioned move, the 2023 financial year could see them racking up over $3.7 billion in savings.

Despite the current bleak conditions, Netooze believes the market remains promising. Gartner’s report that the market grew by 41.4% in 2021, totalling 90.9 billion, is certainly a testament to that. 

Netooze® is a cloud platform, offering services from data centers globally. When developers can use the straightforward, economical cloud that they love, businesses expand more quickly. With predictable pricing, thorough documentation, and scalability to support business growth at any stage, Netooze® has the cloud computing services you need. Startups, enterprises, and government agencies can use Netooze® to lower costs, become more agile, and innovate faster.

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