Amazon's AWS Layoffs: Further Confirmation Of Declining Cloud Popularity

Cloud technology solutions (also known as cloud computing or cloud services) typically deliver hitherto on-premises IT resources on demand over the Internet.

Today, leading examples of cloud service providers will include Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) and they can deliver everything from applications to data centers on a pay-for-use basis to their subscribers. 

With cloud solutions, IT resources, by choice, can scale up or down quickly to meet business demands. 

Cloud solutions enable rapid access to flexible and low-cost IT resources without large upfront investments in hardware or time-consuming installation and maintenance. 

This way, businesses can provision exactly the type and size of computing resources they need to power a new initiative or operate their IT departments more efficiently.

However, despite these amazing cloud solutions, the table of fortune appears turning around against cloud preferences.

Recently, AllNews Nigeria has been reviewing trending developments in the world of cloud service providers, especially as regards declining fortunes. 

The focus today is on Amazon's AWS, a clear leader in the cloud technology space.

AWS Layoffs

Amazon recently announced it was laying off another 9,000 employees for which AWS employees were not exempt, but rather with Amazon CEO (and former AWS CEO) Andy Jassy announcing the cloud division would be included in this latest round.

According to confirmed reports, this latest layoff around would include 10% of the total coming from AWS.

The company would not confirm those numbers, instead referring to Jassy’s memo to employees that was published this morning as the gist of its statement.

According to that memo, the reason the company is doing the layoffs in stages is that some managers were still evaluating their departments and they weren’t ready at the time of the first round.

“The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible,” Jassy wrote.

Ray Wang, founder and principal analyst at Constellation Research, says that Amazon has had to look carefully at every aspect of the organization, and AWS was no exception.

“This is part of a larger trend of tech companies getting lean again, and Amazon had gotten bloated in years past.

"They finally completed their analysis a few weeks back and now AWS has cuts too,” he said.

In the company’s most recent earnings report at the beginning of last month, the cloud division’s growth rate dipped to 20%, down from over 39% growth the previous year.

To make matters worse, CFO Brian Olsavsky telegraphed that growth was slowing even more.

“As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters.

"So far in the first month of the year, AWS year-over-year revenue growth is in the mid-teens,” he said at the time.

Against that backdrop, the layoffs shouldn’t come as a surprise. In fact, the cloud infrastructure market overall has been experiencing slowing growth.

After years of runaway numbers, cloud spending is being curtailed, and it is starting to have an impact on the market.

At the close of the most recent earnings reports cycle, the cloud infrastructure market slowed overall to 21% growth, down from 36% growth the prior year.

What’s more, Amazon’s long-time rival Microsoft gained market share.

While Microsoft’s growth also slowed last quarter, the company has been growing faster and is starting to gain slowly but steadily on AWS.

That said, John Dinsdale, chief researcher and research director at Synergy Researcher Group, a research firm that watches the cloud infrastructure market, says that in spite of these numbers, the market still is growing substantially, and has been dogged by external factors like “a historically strong US dollar and a severely restricted Chinese market.”

Dinsdale says the layoffs are understandable given the market drop, but he doesn’t think it’s cause for alarm.

“So, is the market growth rate dropping? Yes. For companies whose revenues and organisations have grown at staggering rates, is there room for rationalization and some cost-cutting? Yes. Is the sky falling? No,” he said.