Amazon Web Services' growth slows - but profitability increases

AWS still grew at a rate of 55 per cent in 2016

Amazon Web Services, the pioneering cloud computing arm of online retail giant Amazon, saw growth slow during 2016 - although it still registered a 55 per cent increase in revenues during the year, which weighed in at $12.2bn after increasing

However, AWS did increase its operating margin, up from 19 per cent in 2015 to 25 per cent in 2016.

While the growth of AWS remains impressive, the 55 per cent increase in revenues for 2016 compared to revenue growth of 69 per cent in 2015.

Kate Hanaghan, an analyst at TechMarketView, suggested that this reflected a degree of market saturation as the company becomes a top-20 infrastructure provider.

She continued: "What is notable is that AWS is seeing growth across all parts of its business, including public sector. And things are set to heat up in the UK public sector market this year following the launch of AWS's UK region data centre, but also the addition of Microsoft Azure services in UK data centres. Oracle too is set to open a UK region later in 2017."

Growth at AWS this year will be fuelled by a number of migrations of major customers and vendors to the Amazon cloud, claimed the company. These include Workday, credit card company Capital One and burger chain McDonalds, which is shifting its website hosting to AWS.

During 2016, AWS opened 11 ‘availability zones' across five regions in the US, South Korea, India, Canada and the UK. AWS now operates 42 availability zones across 16 infrastructure regions globally and plans to open an additional five availability zones in France and China.

The company's growth, though, might be crimped by a dearth of appropriately skilled staff, added Hanaghan. "One of the ongoing challenges it and the entire UK industry will face, however, is finding enough employees with the right skills to help it execute its plan."

Other users of AWS include ITV and taxi hailing service Hailo. The company has also come up with a 'unique' solution to help customers literally migrate their data from in-house data centres to Amazon's data centres - an articulated lorry.