For cloud giants, usage soars but tech investment delays hobble revenue growth

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As lockdown orders force billions of people to work, learn and play from home during the novel coronavirus outbreak, usage has surged for the cloud computing services that power video conferencing, streaming television and online games.

In particular, peak daily usage for Google’s Meet videoconferencing tool has shot up 30-fold since January while the number of daily users for Microsoft’s Teams chat system has more than doubled to 75 million since early March.

For instance, Microsoft said it put limits on how much cloud computing new customers could consume because of equipment shortages due to lockdowns. “Cloud investment in the worst-affected vertical segments, such as hospitality, aviation, construction, tourism and manufacturing, is being scaled down or delayed,” Canalys said in a report on Thursday. “This has offset some of the short-term growth enjoyed during the quarter.”

Market researcher IDC last week downgraded its forecast for global IT spending in 2020 to a 2.7% decline compared with a previous estimate of a 3.6% rise because of the pandemic.Microsoft Azure, which is No. 2 in cloud revenue after Amazon Web Services, saw its sales growth rate slow the most, at 59% in the first three months of the year from 62% in the prior quarter, company data showed.

As much as a fifth of Microsoft’s cloud revenue could face volatility in the coming quarter because of those delays, the company said. John Dinsdale, a chief analyst at Synergy Research Group, said though some buyers are delaying, their plans to adopt more cloud services have not changed.Amazon, which saw Amazon Web Services revenue growth drop to 33% in the first quarter from 34% a quarter earlier, pointed to an increase in future spending commitments from customers as evidence its business remains healthy.

 

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