With the most recent round of Amazon layoffs, AWS suffers

Employees at Amazon’s cloud division, including the previous CEO of AWS, Andy Jassy, were not exempt when the company announced today that it was cutting off another 9,000 workers.

According to , AWS contributed about 10% of today’s total. The business declined to corroborate such figures, citing Jassy’s memo to staff, which was published this morning, as the main point of its explanation.

According to that message, the corporation is implementing the layoffs in phases because some managers were still reviewing their departments at the time of the first round and weren’t prepared. “The simple answer is that not all of the teams were through with their analysis in the late fall,” Jassy wrote. “Instead of rushing through these assessments without the proper diligence, we elected to communicate the choices we’ve made so individuals have the information as soon as possible.

According to Constellation Research’s founder and chief analyst, Ray Wang, Amazon has had to thoroughly examine every area of the business, and AWS was no different. “Amazon had become fat in the past, and this is part of a bigger trend of internet corporations being trim again. A few weeks ago, they finally finished their analysis, and now AWS has cuts as well, he said.

The cloud division’s growth rate dropped to 20% in the company’s most recent earnings report at the beginning of the month from over 39% growth the year before. The situation was made worse by CFO Brian Olsavsky’s indication that growth was slowing even further. In the coming quarters at least, we anticipate that these optimization efforts will continue to hinder AWS growth. AWS year-over-year revenue increase is already in the mid-teens in the first month of the year, he noted at the time.

In light of this, the layoffs shouldn’t be unexpected. In actuality, growth in the cloud infrastructure business as a whole has been sluggish. After years of explosive growth, cloud expenditure is being restrained, and this is beginning to affect the market. The cloud infrastructure market’s total growth rate dropped to 21% at the end of the most recent earnings report cycle from 36% the year before.

Additionally, Microsoft, a longtime adversary of Amazon, increased its market share. While Microsoft’s growth also slowed in the previous quarter, it has been expanding faster and is beginning to gain ground on AWS gradually.

John Dinsdale, chief researcher and research director at Synergy Researcher Group, which tracks the cloud infrastructure market, says that these numbers don’t change the fact that the market is still growing a lot, despite things like “a historically strong US dollar and a severely constrained Chinese market.”

Given the market decline, Dinsdale believes the layoffs are understandable, but he doesn’t believe they should raise any red flags. “So, is market growth slowing down? Yes. Is there room for restructuring and some cost savings for businesses whose sales and organizations have risen at dizzying rates? Yes. Is the sky about to fall? No, he replied.