back in march 2020, when the world closed, Amazon became the world's reference online store. When people couldn't leave their homes, it became imperative to get products to them, and Amazon thrived. Money poured into his coffers, his stock price skyrocketed, and he hired like mad and built warehouses to meet the growing demand.
The company started the pandemic with approximately 840 employees in the first quarter of 000. By the first quarter of 2022, it had more than 1,6 million workers. The problem was that as the pandemic loosened its grip on public life, people stopped buying everything online and went back to brick-and-mortar stores.
Amazon's CEO, Andy jassy, seems to understand that the market has changed and has commissioned its managers to find places to cut expenses and reduce operating costs, something many large organizations are doing in the midst of a period of great economic uncertainty.
Amazon's efforts included, if the reports are accurate, cut up to 10,000 jobs in the short term to offset the hiring that occurred during the peak of the pandemic.
From a stock perspective, The company has forgone nearly all of the profit it made in the wake of the pandemic, losing nearly 50% of its value this year.. That means Jeff Bezos is slightly less wealthy than he once was. Meanwhile, Jassy has many more headaches to deal with and the pressure to reduce operating costs.
through all this, AWS, Amazon's cloud arm, which Jassy ran before he was promoted to the corner office, It has continued to perform at the same high level as ever. But even AWS reported a slowdown in the third quarter as companies tried to cut cloud costs.
Consider that in the third quarter of 2022, the most recently reported quarter, AWS revenue reached $20 billion, below the 21 billion dollars forecast by many analysts. It might not sound like much, but cloud computing has been one of the few big growth areas, so a failure was a big problem.
That being said, you can't lose sight of the fact that AWS is now on a run rate to become an $80 billion business, so it's not exactly something to lose your mind over, and the consensus is that the cloud business still has plenty of room to grow despite external macroeconomic conditions.
In other words, AWS is likely to do well regardless of currency issues, slowing growth, or customers looking for modest increases in IT spending in the new year. Jassy may have to cut costs across the enterprise, but AWS is likely to be spared from this exercise.
What awaits AWS?
While Amazon may struggle in the new year as it adjusts to existing in a post-pandemic world, the signs are that AWS will continue to grow at a fairly considerable rate, albeit a bit slower than in the past. But can you maintain your market dominance by innovating and adapting to a changing cloud market?
holger müller, Constellation Research Analyst, You see a company in transition to meet the needs of a changing market. “AWS is discovering depth (and synergies) vs. breadth (more services and innovation). This is a multi-year strategy that started in 2022 and will continue in the coming years,” he said.
Corey Quinn, chief cloud economist at Duckbill Group, said AWS needs to do more than that to maintain its position in the market. He wants to see AWS less as a set of disparate tools and more as a button for simplicity. He believes that AWS is generally too difficult for most companies.
"People want solutions that work, not a bunch of pieces they have to assemble themselves"Quinn explains.
"What the industry is clamoring for is something like 'one click button that registers a domain, starts up a web server of some kind, populates it with client content, registers a certificate, sets up the CDN. and don't charge you a bill thick enough for your toddler to use as a booster seat,'” he added.
Adam Selipky, CEO of AWS, seems to get it. Perhaps his time at Tableau helped him see the power of SaaS and packaged solutions versus the toolbox approach. James Sanders, principal analyst for cloud and infrastructure at CCS Insight, said companies are increasingly concerned with cost optimization, and Selipsky is trying to address that.
We may be in a transition period for AWS, where it becomes more of what Quinn, a seasoned cloud professional, hopes to see in the future. It's clear that AWS is still the cash cow for Amazon, and while the retail side of the house may struggle to find its footing, AWS keeps rolling, regardless of the economic conditions swirling around it.
