Lydia Leong, an analyst at Gartner, said she’s seeing the same trend among her own clients. AWS is signing both more deals and vastly larger deals compared with its main competitors, Microsoft’s Azure and Google Cloud, she said.
“The bulk of AWS deals for Gartner clients are in the range of $5 million to $15 million, with many deals now exceeding $30 million, which is significantly higher than Azure (which tend to be below $1M) and GCP (typically below $5M),” Leong said in an email to CNBC.
Leong said the more interesting trend is the growing number of “renegotiations” — deals in which the customers are quickly blowing past their commitments due to new unexpected projects or business growth, and are compelled to renegotiate a new higher commitment in return for a bigger discount.
At re:Invent, AWS announced a number of large enterprise deals with companies like Amgen, Capital One and Verizon. Korean Air, for example, committed to a 10-year deal that would move all of its infrastructure needs to AWS.
Although most multiyear contracts with enterprise customers come with discounts, they haven’t slowed down AWS’ revenue growth. In the latest quarter, AWS revenue jumped another 46 percent, to $6.7 billion, up from the year-ago period’s 42 percent growth rate.
“We’re very happy with the growth in the business — the momentum that we’re seeing with enterprise customers,” said Amazon CFO Brian Olsavsky during October’s earnings call.
In a statement to CNBC, Microsoft expressed satisfaction with its progress against AWS. “We continue to see rapid growth in our cloud business, with Azure revenue in Q1 growing 76%. Our differentiation continues to be in the partner approach we take with our customers to drive success for their business, and this in turn drives increased consumption of our cloud services. We have significant engagements with global brands including Starbucks, Volkswagen, Shell, Walmart, Chevron, and BMW to run and grow their businesses with Azure.”
Google did not immediately return a request for comment.