Cloud computing drives massive growth for big U.S. tech firms

SAN FRANCISCO (Reuters) – Amazon.com Inc (AMZN.O), Microsoft Corp (MSFT.O), Alphabet Corp’s (GOOGL.O) Google and Intel Corp (INTC.O) are all putting their chips on the cloud computing business, and it is booming.

FILE PHOTO – A sign marks the Microsoft office in Cambridge, Massachusetts, U.S. January 25, 2017. REUTERS/Brian Snyder/File Photo

All four companies posted stellar quarterly earnings on Thursday, showing the strength of the shift in corporate computing away from company-owned data centers and to the cloud.

Microsoft’s Azure business nearly doubled, with year-over-year growth of 90 percent. The company does not break out revenue figures for Azure, but research firm Canalys estimates it generated $ 2 billion for Microsoft.

“The move to the cloud was one we felt Microsoft could always benefit from, and they’re showing us that they can,” said Kim Forrest, vice president and senior equity analyst at Fort Pitt Capital Group, a portfolio management firm.

Highlighting the quarter for Microsoft was a deal securing retailer Costco (COST.O) as an Azure customer. That came just two months after the close of Amazon’s acquisition of grocery chain Whole Foods, which has heightened unease among retail and e-commerce companies about working with Amazon, said Ed Anderson, an analyst with Gartner.

Tim Green, analyst with the Motley Fool, said Amazon could find it needs to make changes at some point at Amazon Web services. “Spinning off AWS at some point down the road might become necessary to prevent an exodus of customers,” he said.

Amazon Web Services is still delivering far more revenue than any of its peers. For the quarter, AWS raked in nearly $ 4.6 billion — a year-over-year increase of 42 percent. AWS may have missed out on Costco, but the company secured deals with Hulu, Toyota Racing Development, and most notably, General Electric.

Google Cloud Platform landed deals with the likes of department store retailer Kohl’s and payments processor PayPal. Like Microsoft, Alphabet does not break out revenue for Google Cloud Platform, but Canalys estimates the business generated $ 870 million in the quarter, up 76 percent year-over-year.

FILE PHOTO – The logo of Amazon is seen at the company logistics center in Lauwin-Planque, northern France, February 20, 2017. REUTERS/Pascal Rossignol/File Photo

Google Chief Executive Officer Sundar Pichai said Google Cloud Platform is a top-three priority for the company. He said Google plans to continue expanding its cloud sales force.

Canalys estimates the cloud computing market at $ 14.4 billion for the third quarter of 2017, up 43 percent from a year prior. Amazon holds 31.8 percent of the market, followed by Microsoft at 13.9 percent and Google with 6 percent, according to Canalys’ estimates.

The “cloud market will keep growing faster than most of the traditional information technology segment, as the market is still in the developing stage,” said Daniel Liu, research analyst with Canalys.

FILE PHOTO – The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake/File Photo

Reflecting the overall growth of the market was the strong performance by Intel, which sells processors and chips to cloud vendors. In July, Intel launched its new Xeon Scalable Processors, which drove 7 percent year-to-year growth for the company’s data center group.

The big three cloud vendors also benefit from the decision by many enterprises to build their applications using more than one cloud vendor. Retailers Home Depot Inc (HD.N) and Target Corp (TGT.N), for example, told Reuters they use a combination of cloud providers.

“Our philosophy here is to be cloud agnostic, as much as we can,” said Stephen Holmes, a spokesman for Home Depot, which uses both Azure and Google Cloud Platform.

Some analysts expect cloud services growth to slow over time as competition increases.

Amazon, for instance, has said that price cuts and new products with lower costs on average are a core part of its cloud business. Additionally, Amazon Web Services saw usage growth outpacing that of revenue growth, said Amazon Chief Financial Officer Brian Olsavsky.

“Going forward, cloud services will become more of a commodity, and the prices will quickly compress,” said Adam Sarhan, CEO of 50 Park Investments, an investment advisory service. “For now though, it’s a great business with plenty of room for all to grow.”

Reporting by Salvador Rodriguez; Additional reporting by Jeffrey Dastin and Paresh Dave; Editing by Leslie Adler; Editing by Jonathan Weber

Our Standards:The Thomson Reuters Trust Principles.

Tech

Oh! Canada May Beat U.S. to Commercial Drone Delivery

Test flights into remote indigenous community to start in weeks.

Our neighbors to the north may get commercial drone flights before the U.S. does.

Drone Delivery Canada says it has received the regulatory approvals to test commercial drone delivery service in northern Canada within the next four weeks. The drones will be used in Moose Cree First Nation, an indigenous community, about 440 miles north of Toronto, company CEO Tony Di Benedetto tells Fortune.

“Up there, there are no roads, so moving around is complicated and expensive,” Di Benedetto says. “There are two communities separated by a river and to move between them, you can spend a lot of money on a water taxi, which is literally a raft.”

Transporting mail and supplies is time consuming and added time means added cost. A container of detergent can go for $ 30 to $ 40 while milk and other perishables cost double what they do in more urban areas, according to The Toronto Star,

In the winter, the locals use frozen rivers to travel, but global warming has made that risky. Helicopter service is another option, but costs $ 1,800 an hour.

Related: New Senate Drone Bill Would Give Power to the States

To address this transport problem, Di Benedetto hopes to build “a railway in the sky” using drones that can be controlled and recharged from stations at each end of the route. Over the last three years, DDC has worked with researchers from the Universities of Toronto and Waterloo on technology it says will enable fully autonomous flights that can operate beyond line-of-sight by ground personnel.

In the U.S.and many jurisdictions, rules require that drones remain in view, or the line of sight of a ground-based operator. DDC is the first Canadian company to get approval from Transport Canada—Canada’s FAA equivalent—to fly drones beyond line-of-sight, De Benedetto says.

Related: Where Are All the Commercial Drones?

Initially, DDC plans to test a small unmanned aerial vehicle with a 50-mile range that can carry just under 10 lbs of cargo before increasing the range and capacity. The biggest drone his company is considering using can carry about 3,300 lbs and fly up to 15 hours, Di Benedetto said.

DDC has attracted U.S. companies that want to use its system. Last year, office supply chain Staples signed up to explore using DDC drones in Canada, for example.

Retail giant Amazon amzn has long signaled its interest in delivery drones. Di Benedetto says DDC can help other retailers do what Amazon can. Amazon would like to use drones to deliver purchases from its online store to their buyers, even in populated areas. Flying drones over urban areas is a concern of the FAA.

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DDC’s system can control drones that fly as high as 40,000 feet, although the delivery drones will probably stay between 500 to 1,500 feet high, Di Benedetto said.

U.S. regulations on commercial drone use are still under development. Currently in the U.S., rules prohibit commercial drones from flying beyond line of sight or over populated areas, for example. Last year, the FAA established several test centers to put UAVs through their paces. But, there is no timeline for commercial drone use in the U.S., said Gretchen West, senior advisor with Hogan Lovells, a law firm that works with the drone industry. Transport Canada, on the other hand, is working closely with commercial drone companies to enable expanded use of drones in certain circumstances, she said.

There have been limited drone delivery tests in the U.S. in controlled settings. Amazon amzn for example showed a small drone dropping a package of sunscreen at a tech event last summer. What is being proposed here is much broader use albeit over less populated areas.

Tech

Hurricanes Irma and Harvey Caused U.S. Economy to Lose Jobs in September

The September jobs report is out.

It showed that the US economy shed jobs for the first time since 2010, something the Bureau of Labor Statistics blamed on the damage caused by the hurricanes Irma and Harvey.

In a release Friday, the BLS said the hurricanes affected the payroll jobs number but not the unemployment rate.

“It is likely that the payroll employment estimates for September were lower due to the effects of Hurricanes Irma and Harvey,” William J. Wiatrowski, the acting BLS commissioner, said in the release.

“The storms caused large-scale evacuations and severe damage to many homes and businesses,” he continued. “Many employees in the areas affected by the hurricanes were likely off payrolls during the reference pay period for September.” 

Nonfarm payrolls fell by 33,000 in September, according to the BLS. Most of the losses occurred in the leisure-and-hospitality sector. It shed 111,000 jobs, its most dating back to at least 1939.

Within that sector, the BLS drew attention to employment in food services and drinking places, which fell by 105,000 last month.

“In this industry, a large majority of workers are not paid when they are absent from work,” Wiatrowski said. “Hence, if these employees were unable to work during the September survey reference pay period because they had evacuated, or because their establishments were not open for business due to power failures or other effects of the hurricanes, they were not included on September payrolls.”

The unemployment rate fell to 4.2%, its lowest level since February 2001.

“Payrolls were hit hard by the hurricanes,” Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said. “We expect the recovery to begin in October, but if Katrina is any guide the big rebound won’t come until November.”

Irma made landfall during the September jobs report’s reference period, while Harvey hit before it. Puerto Rico and the US Virgin Islands are not included in the report.

This post originally appeared on Business Insider.

Tech

Cloud computing slows energy demand, U.S. says

Ten years ago, power usage at data centers was growing at an unsustainable rate, soaring 24% from 2005 to 2010. But a shift to virtualization, cloud computing and improved data center management is reducing energy demand.

According to a new study, data center energy use is expected to increase just 4% from 2014 to 2020, despite growing demand for computing resources.

Total data center electricity usage in the U.S., which includes powering servers, storage, networking and the infrastructure to support it, was at 70 billion kWh (kilowatt hours) in 2014, representing 1.8% of total U.S. electricity consumption.

Based on current trends, data centers are expected to consume approximately 73 billion kWh in 2020, becoming nearly flat over the next four years. “Growth in data center energy consumption has slowed drastically since the previous decade,” according to a study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory. “However, demand for computations and the amount of productivity performed by data centers continues to rise at substantial rates.”

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Samsung says new U.S. offices are its ‘biggest investment in Silicon Valley’ to date

Samsung officially opened the doors to its new 1.1-million-square-foot Silicon Valley offices Thursday, more than 30 years after its arrival in the San Jose tech corridor in 1983.

The building will house various research labs dedicated to semiconductors, LEDs and displays, staff in sales and marketing, and other support areas, the company said.

“[We are] laying the groundwork for a more aggressive pace of growth over the next several decades,” said Samsung’s chief executive, Dr. Oh-Hyun Kwon, at the grand opening ceremony.

Meanwhile, the company’s president of its U.S.-based device solutions operations, Jaesoo Han, said that the move “represents a major milestone as we open our most strategically important Samsung facility in the U.S., and also our biggest investment in Silicon Valley.”

Samsung also announced that it has established a $ 1 million STEM College Education Scholarship Fund. In its own words:

Deserving university students who are currently enrolled in STEM-focused programs at a California State or University of California school will benefit from this program, beginning with a $ 50,000 gift to San Jose State University this year. Each scholarship will cover tuition and living expenses for one year.

But the announcement of the new office has been largely overshadowed by news in virtual reality today: We reported that the Samsung Gear VR will launch as a consumer product this November for $ 99. (You can read our full roundup from today’s Oculus event here.)

Earlier this week, Samsung unveiled its new fonts-inspired Serif TVs, and shared more about how it relies on startups to stay ahead on technological innovation.

If you happen to be passing through the area, Samsung’s new building certainly looks worth checking out.

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Samsung says new U.S. offices are its ‘biggest investment in Silicon Valley’ to date

Samsung officially opened the doors to its new 1.1-million-square-foot Silicon Valley offices Thursday, more than 30 years after its arrival in the San Jose tech corridor in 1983.

The building will house various research labs dedicated to semiconductors, LEDs and displays, staff in sales and marketing, and other support areas, the company said.

“[We are] laying the groundwork for a more aggressive pace of growth over the next several decades,” said Samsung’s chief executive, Dr. Oh-Hyun Kwon, at the grand opening ceremony.

Meanwhile, the company’s president of its U.S.-based device solutions operations, Jaesoo Han, said that the move “represents a major milestone as we open our most strategically important Samsung facility in the U.S., and also our biggest investment in Silicon Valley.”

Samsung also said that it has established a $ 1 million STEM College Education Scholarship Fund. In its own words:

Deserving university students who are currently enrolled in STEM-focused programs at a California State or University of California school will benefit from this program, beginning with a $ 50,000 gift to San Jose State University this year. Each scholarship will cover tuition and living expenses for one year.

But the announcement of the new office has been largely overshadowed by news in virtual reality today: we reported that the Samsung Gear VR will launch as a consumer product this November for $ 99. (You can also read our roundup from that event here.)

Earlier this week, Samsung unveiled its new fonts-inspired Serif TVs, and shared more about how it relies on startups to stay ahead on technological innovation.

More information:

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