AI Boom Spurs Moves to Secure Customers with Free Services
"AI in the Cloud is an Opportunity, Still in the Very Early Stage"
The generative artificial intelligence (AI) boom, which began with ChatGPT, is revitalizing the cloud market that had been facing concerns over slowing growth. Industry leader Amazon, as well as Microsoft (MS) and Google, who are leading the AI craze, are seeking new opportunities.
According to the Wall Street Journal (WSJ) on the 27th (local time), the three major cloud providers have recently been offering free service promotions to potential customers while their sales teams are actively engaging in outreach.
Satya Nadella, CEO of MS, recently conducted sales presentations at the Redmond headquarters and New York office explaining how companies can efficiently utilize AI through MS’s cloud service, Azure Cloud.
Google also announced that it will sell access to its AI program, "The Pathways Language Model," which developers can use to build software leveraging its cloud services within this month. Users will be able to customize tools such as chatbots or webpage summarizers through this.
Google plans to initially allow only some customers to use the AI software, which was originally used internally, and then accept additional waitlist requests. Thomas Kurian, CEO of Google Cloud Platform, said, "AI will be a huge market opportunity," adding, "We are still in the very early stages."
Judson Althoff, Chief Commercial Officer (CCO) of MS, said they aim to attract more customers to MS’s cloud services through AI, stating, "As sudden advances toward generative AI are genuinely happening, we see MS’s sales teams harnessing energy."
The reason cloud providers are moving busily like this is that cloud demand is expected to increase significantly with the spread of AI adoption. For example, global accounting firm KPMG had been reducing cloud computing costs over several recent quarters but decided to incorporate OpenAI’s technology, the developer of ChatGPT, into its products and began using the MS Azure OpenAI program. Brad Brown, KPMG’s Global Chief Innovation Officer (CIO), said that observing this process made him realize that spending on AI services will increase, adding, "AI is the opportunity cloud companies have been waiting for. It will definitely drive consumption."
Cloud service providers are also targeting another opportunity by offering free cloud services to AI technology startups. According to venture capital firm Andreessen Horowitz, 10-20% of the revenue from generative AI applications goes to cloud companies. Most of this is secured by the three major companies: Amazon, MS, and Google.
With this opportunity in mind, Amazon is considering providing up to $300,000 worth of free computing resources related to cloud services as part of a program for generative AI startups. Google has also expanded the free usage amount for AI startup clients to more than double.
The reason cloud providers are moving busily like this is that, with recent market growth slowing, they need to secure new growth engines. The market expects that this year, the revenue growth rate of the three major cloud providers?Amazon, MS, and Google?will be 18%, about half of last year’s level.
Amazon Web Services (AWS), Amazon’s cloud service, which is the industry leader, recently recorded its lowest quarterly growth rate ever. Earlier this month, Amazon conducted layoffs of 9,000 employees, highlighting the sluggishness in its cloud computing division. MS also warned that its business growth could slow as customers reduce cloud computing expenditures to cut costs.
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