Interview Preparation

When it comes to Due to cloud growth, it’s probably safe to say that the sky isn’t falling, even though revenue growth rates have been. We have seen aggregate public cloud revenue growth decline from 32% in the first quarter of last year to 19% this year. That’s quite a steep drop, and it shows that the cloud has run into some headwinds.

As a result, we have seen people talking about a great repatriation where cloud workloads will return to on-premises, but the evidence does not suggest it’s happening. Instead, companies may be slowing down their migration to the cloud as they look for the most efficient way to distribute their workloads.

Clearly, enterprises have learned that not all workloads are well suited to the cloud. Some that can’t deal with even a bit of latency to get to the cloud and back, for example, must be hosted at the edge to be closer to the compute source. But it doesn’t seem like many IT departments will be long in returning to the days of stockpiling and stacking new servers.

So why is public cloud growth slowing? Customers have begun scrutinizing their skyrocketing bills in the cloud, with budgets coming under increasingly intensive review this year, looking for ways to cut costs, which Amazon chief financial officer Brian Olsavsky acknowledged in company earnings call with analysts this week.

“Enterprise customers continued their multi-decade shift to the cloud while working closely with our AWS teams to carefully identify opportunities to reduce costs and streamline their work,” he said during the call. In CFO parlance, that means they’re not abandoning the cloud, but they’re taking a hard look at spending, which is having a pretty significant impact on the company’s cloud growth numbers.

He added that the slowdown in growth could continue for a couple more quarters, but that customers generally remain on top of the cloud. “So far in the first month of the year, AWS’s year-over-year revenue growth is in the middle of the decade. That being said, going back, our new customer pipeline remains healthy and strong, and there are many customers who continue to implement plans to migrate to the cloud and commit to AWS for the long term.”

By now, the value proposition of the cloud, regardless of vendor, is clear. It allows for a level of flexibility that simply isn’t possible when you run your own data center, and running your own data center is expensive and requires a completely different skill set than running workloads in the cloud.

So what does all this mean for cloud infrastructure market revenue growth? If the data is correct, it will be fine. It seems a bit risky in the short term.