Amazon, IBM, Microsoft Cloud Sales Showing Big Growth

For whatever reason, it’s still an industry curiosity to try to project who’s going to dominate the cloud–whose platform will prevail–as if it can be conquered at all.

Ultimately, will Amazon’s (AMZN) Web Services, the cloud’s big dog right now, prevail, or will Google’s (GOOG) cloud services, IBM’s (IBM) cloud business, or Microsoft’s (MSFT) Azure platform catch up to carry the day with customers?

Despite Amazon’s current dominance, it may still too early to tell. But one marker that’s emerging is the financial reporting of the top rivals, specifically calling out cloud revenue. Many of the leading players are moving not only to report quarterely cloud revenue but also to point to its profitability.

While the figures don’t provide apples-to-apples comparison, they signal the growing reliance on cloud sales for the biggest of players in the industry.

In Amazon’s just completed Q1, the online retailer’s Web Services business showed revenue of $1.57 billion and an operating profit of some $265 million, a somewhat unusual figure considering the fact that Amazon’s overall results often show losses. Amazon said that in the previous 12 months, AWS produced some $5.16 billion in sales, or 7 percent of the company’s overall revenue.

For Q1, AWS posted 49 percent year-over-year sales growth, eye-opening particularly in the context of Amazon’s Q1 15.1 percent sales increase from last year to $22.72 billion.

“Amazon Web Services, one of three Amazon.com business segments that provides data storage and cloud services to big IT companies and start-ups, is still a $5 billion business and growing fast,” wrote Zacks.

The company reported an overall first quarter net loss of $57 million for the period compared to income of $108 million this time last year.

With the exception of Google, Amazon’s rivals also reported cloud revenue in one form or another.

Google reported $17.3 billion in sales for Q1 2015, a 12 percent rise from the $15.4 billion it posted this time last year, and a 3.9 percent uptick in net income to $3.6 billion, or $5.20 a share, from last year’s $3.5 billion or $5.04 a share results.

Oddly, the company didn’t say anything about the cloud but did talk about its “momentum” in the mobile ad business and mobile search.

Cloud revenue was one of the few bright spots for IBM in its Q1 2015 amid the vendor’s 12th consecutive quarter of declining sales. While IBM’s cloud sales grew by 75 percent to $7.7 billion, its overall business incurred a 12 percent drop in revenue to $19.6 billion and a 5 percent slide in net income to $2.33 billion.

Positioned against Amazon, IBM’s numbers don’t amount to an exact comparison, inasmuch as the vendor includes hardware, software and services in its figures.

Microsoft, in its just reported FQ3, showed substantial growth in its cloud business as commercial cloud revenue grew 106 percent for an annualized revenue run rate of $6.3 billion.

“Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter,” said Satya Nadella, Microsoft chief executive.

But again, in terms of a direct comparison to Amazon’s cloud numbers, Microsoft includes sales from some online applications into its figures. And, as the New York Times reported, a recent Deutsche Bank estimate placed the vendor’s cloud business derived from services at about 10 percent of AWS.