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Do Amazon’s Latest Numbers Show Signs of Trouble in Cloud Computing?

Revenue growth for Internet companies is a funny thing. Most people would be happy that revenue is growing. Most people would be happy that the company is making money. Well, if you are tracking a hot technology trend like cloud computing, simple growth is not enough. You would want to see that the big players in a particular market segment of cloud computing are showing healthy growth quarter after quarter. This indicates that the market is growing and shows no signs of maturing or tightening.

Well, it appears that the quarterly Amazon revenue growth that includes cloud-based services is showing revenue growth slow down from a peak of 78% in 2011 second quarter to close to just north of 50% in the fourth quarter of 2013. It seems that the heady growth of cloud computing is coming to an end. This can mean many things. First of all, everybody and his dog already knows how lucrative cloud computing will be. It revolutionizes everything, thanks to mobile apps. It’s basically already changing how we interact with software. It used to be that you’d have to go to a store, you’d have to drive to a store, pick up this big clunky box, open the box and there’s this one CD in the box. In other words, they kill the tree just to hold that CD, and you plop the CD in, and you run the software. If there’s a problem, you get on the phone, talk, talk and argue and beg the technical support people to help you out and if there’s a virus, then you’re out of luck until you get on the phone again and install the right antivirus software to take care of the problem. Well, cloud-based computing took care of all of that. Upgrades? It’s all done remotely. Security? Done remotely. More importantly, in terms of how much you pay, you only pay for the amount of software that you actually use. How awesome is that? And in the vanguard of all of this is Amazon. While it seems that big players like Microsoft and other players are entering the space, and this might have an impact on revenue growth for Amazon, this doesn’t necessarily mean that the market is contracting or stabilizing. It just means that Amazon’s share of the pie is slowing down as more and more players pile on. Regardless, Amazon made over 1 billion dollars off of this part of its business in the past quarter. Not too shabby.