As Growth Slows, Cloud Computing Takes Stock

As Growth Slows, Cloud Computing Takes Stock

Cloud computing, i.e. a way of using computer hardware through the internet, has been the beau of IT departments for the better part of the last decade. However, the technology seems to have hit a snag following reports that Microsoft, Amazon, and Alibaba have all experienced a slowdown in the uptake of their cloud computing services. This could leave the door open for hardware producer Nvidia to dominate what’s still an evolving market around the world. 

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Teething Problems

All technologies go through teething problems. For instance, it took nearly thirty years for virtual reality to develop from Nintendo’s famous headache box, the Virtual Boy, to the much more saleable Oculus Rift device. Similarly, cloud computing is likely to see its position in the world change over the next few decades. For one, the fact that it encompasses three different areas, namely infrastructure as a service, platform as a service, and software as a service means that it has more than a few directions to go in.

Part of this evolution may be limited to particular regions or industries too. Returning to gaming, Nvidia is providing its network hardware to civilian users so that they can play new titles without the need for expensive consoles. Casino operators make heavy use of cloud services as well. Bookmakers in Japan, like Supercasi, Pinnacle, and Yugado, are able to reduce latency with cloud computing and provide safe and secure casino and sports wagering to their players. 

Amazon Web Services

While civilian uses exist (e.g. Google Drive and Microsoft’s OneDrive), it wouldn’t be inaccurate to state that cloud computing is predominantly used in business. This brings us right back around to the corporations mentioned earlier. Amazon Web Services (AWS) currently has a market share of 34%, according to InsiderMonkey, closely followed by Microsoft Azure (21%), Google Cloud (11%), and Alibaba Cloud (5%). Due to the size of Amazon’s share, it can provide a valuable barometer for the industry’s health as a whole.

The good news is that the recent slump in cloud usage, as reported by the Association Press, is a little misleading. The sector is still growing quickly – just not as fast as it was before. In Q4 of 2022, AWS posted growth of 20%, which was 50% down over Q4 of the previous year. This drop will undoubtedly come as a shock to Amazon’s decision-makers but its cause doesn’t necessarily spell cause for concern. Clients are simply looking for less expensive ways to run their businesses

A Controlling Influence

Another major cloud company, Alibaba, also reported slowing growth, down to 3% in Q4 2022 from 12% in Q1. In contrast, tech company Nvidia posted significant profits at the end of last year, which has led some analysts to declare the chip manufacturer a possible usurper in the cloud space. This prediction has much to do with the fact that an exciting technology that exists on the cloud – artificial intelligence – is among Nvidia’s target markets for the future. 

However, there may be a spanner in the works in the shape of cost-cutting at cloud-using businesses. Spanish newspaper El Pais notes that all the corporations with a controlling influence in the tech industry (Apple, Microsoft, Alphabet, Meta, and Amazon) are doing what mega-businesses describe as struggling. Twitter, Tesla, Shopify, Netflix, Yahoo, eBay and just about every other technology or internet firm have also made layoffs recently. 

This is why cloud uptake is down. It could also paint a grim picture for cloud services in the near future, as growth starts to slow down. Still, as long as more and more people keep dipping their virtual toes into the cloud, there’ll be no need for pessimism in 2023 and beyond.


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