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The Bright Side of AWS’s Slowing Revenue Growth

When shopping startup Moovweb first launched a decade ago, it used Amazon Web Services, paying by the hour like many startups do. Now, the company pays 40% of its million-dollar annual AWS bill a year in advance—and gets a 30% discount in exchange.

Moovweb is one of a growing number of companies committing to use AWS for as long as three years, in exchange for significant price cuts. AWS has long offered aggressive discounts but analysts say companies are taking more advantage of these offers because they have a better idea of the number of servers they’ll need in advance. At the same time, AWS has tweaked its pricing to make long-term commitments—known as Reserved Instances—more attractive.

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“The typical buying behavior from a large enterprise is they will make large and longer-term commitments. And if in return for getting those two things, AWS needs to offer large upfront price discounts, that’s a fair trade,” Deutsche Bank analyst Karl Keirstead said.

Yongquan Piao and Ido Pollak commented on this article.
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“If you know you’re going to use a certain type of server for a year, you’d rather pay 70 cents than a dollar for it.”