Cloud Competitors: How Amazon Web Services, Microsoft Azure's Quarterly Performance Stacks Up

Big tech companies have found varying degrees of success with cloud services. 

Amazon.com, Inc. AMZN, with its Amazon Web Services is often viewed as the pioneer in cloud computing.

The online retail giant made a prudent decision when it decided to diversify into the cloud, an area unrelated to its core business, in 2006. It maintains the pole position among cloud computing companies.

Software giant Microsoft Corporation MSFT launched its Azure cloud business in early 2010 and is the runner-up in the sector. 

With both companies having reported September-quarter results, Benzinga looked at how the two cloud services performed. 

AWS Loses Some Sheen

Amazon's AWS brought in sales of $8.995 billion in the third quarter, a 35% year-over-year increase. In comparison, Amazon's total net sales climbed 23.7%.

Out of the company's total operating income of $3.16 billion, AWS contributed $2.26 billion, or roughly 72%.

Amazon's retail business in North America fetched $1.28 billion in operating income, while its international retail business bled, reporting an operating loss of $386 million.

Source: Amazon

The third quarter brought the slowest year-over-year growth in net sales for AWS since the company started breaking down numbers in 2015.

The operating income, through accounting for the bulk of the total for Amazon, came in slightly shy of Street estimates.

This figure, along with the margin contraction in the retail business in the wake of increased investment, helps explain the negative stock reaction to Amazon's quarterly report. 

See Also: Jeff Bezos Could Lose Title Of World's Richest Person After Amazon's Earnings Miss

Azure Gains Traction

Microsoft's first-quarter results revealed that its Intelligent Cloud business accounted for $10.8 billion of Microsoft's total revenue of $33.1 billion.

Cloud revenue increased 27%, significantly higher than Redmond's overall 14% revenue growth. Azure revenue climbed 59%. 

Source: Microsoft 

"Our Commercial Cloud business continues to grow at scale as we work alongside the world's leading companies to help them build their own digital capability," CEO Satya Nadella said on the Microsoft earnings call.

The cloud businesses of both companies have grown by leaps and bounds, contributing a meaty portion of their top- and bottom-lines.