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Despite an early-week scare, cloud earnings finish strong

SAP's disappointing results had investors worried that a weak economy had finally caught up with the titans of enterprise tech, but AWS, Microsoft and Google are still going strong.

Despite an early-week scare, cloud earnings finish strong

All three major vendors reported strong revenue growth this week.

Image: Protocol and Gonza

At a moment of great uncertainty for the world economy, with a new wave of the pandemic looming and one of the most consequential U.S. elections in decades around the corner, it's still a pretty good time to be in the cloud computing business.

AWS, Microsoft and Google all continued to benefit from the generational shift away from self-managed data centers to at least some degree of cloud computing during the third quarter of 2020. All three major vendors reported strong revenue growth this week but appear to be very closely watching an unsteady economy that could be forced into lockdown once again this winter.

AWS continues to lead this pack, recording $11.6 billion in revenue, a 29% jump compared to the previous year. On a conference call following the release of its results, Amazon Chief Financial Officer Brian Olsavsky pointed out that a notable number of customers are looking to cut short-term costs by optimizing their usage of AWS' cloud services, but that the long-term growth trend seems unchanged.

Microsoft also continues to reap the benefits of its decision five years ago to completely reorient the company around cloud computing even as it refuses to disclose the amount of revenue generated by Azure, its flagship cloud infrastructure service. Back-of-the-envelope math suggests that Azure pulled in around $6.3 billion, a significant chunk of the $15.2 billion in quarterly revenue Microsoft attributed to its "commercial cloud" business and a 48% increase compared to last year, the strongest growth rate of the three.

For its part, while Google was "later than peers" to capitalize on cloud computing, as Alphabet Chief Financial Officer Ruth Porat put it on the company's earnings call, it recorded a 44% jump in overall Google Cloud revenue. That number — $3.4 billion — includes revenue from the newly rechristened Google Workspace office productivity service as well as Google Cloud Platform.

"The point that Sundar [Pichai, Alphabet CEO] and I have underscored is that we are investing aggressively" in the future of Google Cloud, Porat said. To that effect, Google plans to disclose additional details about Google Cloud's financial performance when the company reports fourth-quarter earnings, including historical performance, she said.

No one can predict with any certainty how the economy will fare if widespread lockdowns become the norm again during the winter months in the Northern Hemisphere, which could force businesses to delay capital spending projects like tech infrastructure upgrades. While cloud infrastructure computing users tend to save money over the long run compared to running their own servers, they often see a short-term increase in computing costs as they transition their applications and learn how to use cloud services efficiently.

That could be enough to put potential cloud buyers off making any big purchases for the next six months until the extent of the latest wave of the pandemic is better understood. But, in a way, extended work-from-home orders are also good for cloud computing; after all, if you're managing your own equipment, somebody's going to have to go into the office to replace that broken hard drive or fix that configuration error.

"What we have learned over the last nine months or so is the best way for any business to ensure both resilience, as well as pivot and transform and reimagine how to work with some of the constraints, is digital tech," said Satya Nadella, Microsoft CEO, on his own conference call earlier in the week.

Enterprise vendors that have been slower to embrace the cloud may have had a rougher time during the third quarter, as data center customers put off spending decisions. SAP's disappointing results Sunday evening had many investors worried that the broader enterprise market was in for a slowdown, but that doesn't appear to be the case; ServiceNow (led by former SAP CEO Bill McDermott) recorded strong demand for its cloud-based automation software during the third quarter.

Indeed, sales of traditional IT equipment seem to be faring the worst at the moment. Microsoft's server operating system business actually declined during the third quarter, although it faced a tough comparison against last year when an end-of-support deadline for older Windows Server software loomed. And Intel reported a decline in revenue from its data center group during the third quarter, with a shocking 47% slump in chip revenue from customers other than the cloud providers themselves.

One truth exposed by this challenging year is that companies that have invested in modern enterprise tech have fared better than peers that have dragged their heels over the past few years. They've been able to adapt more quickly to upheavals in their business models and better manage remote workforces, among lots of other things.

Whatever happens over the next six months, that will still be true on the other side of this historic period. And as the cloud market starts to mature, the competition will start to get interesting.

Power

Don't sacrifice security for performance when computing at the edge

Companies must look at security in tandem with networking.

Federal IT managers and security analysts need to weigh the risk and reward of each upgrade or improvement to minimize new risk, writes Jim Richberg.

Image: Florian Olivo/Unsplash

Jim Richberg is the Public Sector Field CISO at Fortinet.

As federal agencies increasingly push for improved performance and agility through their networks and devices, they must also consider the lack of visibility that comes with deploying cutting-edge technology. Centralized visibility and unified controls are sometimes being sacrificed in favor of performance and agility through smart devices collecting and processing data at the edge.

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The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
Protocol | Enterprise

Tony Bates hears the call at Genesys

Running a contact center company isn't as sexy as his previous gigs. But this company could be the best chance for him to make a lasting mark.

Tony Bates arrived at Genesys as CEO after hopscotching through various parts of the tech industry.

Photo: Genesys

Be careful what you wish for. For Tony Bates, that's been running a big tech company.

He rose to Cisco's top ranks but didn't get the No. 1 job. His big CEO break was at Skype when it was poised to go public — but months into that gig, Bates' venture backers sold it to Microsoft instead. After a stint at Microsoft, where some eyed Bates for the CEO job that went to Satya Nadella, he took over GoPro. There, he got cut in a round of layoffs as the camera company struggled. He joined Social Capital, which helped fund Slack and Box, for a gig that lasted a year before tech investor Chamath Palihapitiya blew up the venture capital firm he started.

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Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Protocol | Enterprise

Can we talk? Microsoft unveils voice and text-chat service for developers.

Web and mobile developers will be able to use Azure Communication Services to let customers chat with service reps directly from their apps or web sites.

Microsoft is adding more communication services to Azure.

Photo: Microsoft

One year after the pandemic forced businesses to adapt in countless ways, the race to overhaul how they interact with their customers is starting to heat up.

Microsoft said Tuesday it would release Azure Communication Services into the wild this week, kicking off the first day of its Ignite virtual conference. The service, first introduced at the autumn version of Ignite last September, allows developers to embed voice, text chat, SMS or video capabilities into their applications.

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Tom Krazit

Tom Krazit ( @tomkrazit) is a senior reporter at Protocol, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET and paidContent, and served as executive editor of Gigaom and Structure.

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