Business of Tech: Daily 10-Minute IT Services Insights

AI Talent Needed, Copilot Plus PCs Underperform, Amazon's AWS Growth Stalls, SolarWinds Acquired

Feb 10, 2025

Amazon's recent earnings show strength in its cloud division, yet AWS faces rising competition and slower growth in AI workloads. Many businesses struggle to fill tech roles in machine learning and cybersecurity, prompting a shift toward upskilling existing staff. Small businesses are navigating inflation with a notable uptick in tech acquisitions. Meanwhile, AI-enabled co-pilot PCs are underperforming due to high costs and uncertain benefits, raising questions about market readiness for these innovations.

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Quick takeaways

The labor market is cooling as 75% of businesses struggle to find qualified IT talent, prompting a shift towards upskilling employees.

Despite Amazon's strong earnings, AWS is experiencing slower growth compared to competitors, raising concerns about its competitiveness in AI workloads.

Deep dives

Impact of Cooling Labor Market on Job Growth

Recent revisions to labor market data indicate a cooling trend, with average monthly job growth for 2023 adjusted down significantly. This decline suggests that job growth is slightly above the growth of the labor force, reducing concerns of an overheated market. Furthermore, the revisions reflect a reduction of 589,000 job additions in 2024 compared to earlier reports. These changes may benefit the IT services sector by easing some hiring challenges while maintaining demand for outsourced tech services due to a stable labor market.

Intro

2min

Shifts in Consumer Confidence and Tech Employment Landscape

5min

Challenges in AI Adoption and Amazon's Financial Performance

2min

Market Shifts in Cloud Services and Corporate Acquisitions

4min

Amazon has reported better-than-expected earnings for the fourth quarter of 2024, with a significant increase in net income attributed to cost-cutting measures and strength in its cloud business. Despite this positive performance, the company provided disappointing guidance for the current quarter, projecting sales that fall short of analysts' expectations. Amazon Web Services (AWS) continues to be a dominant player in the cloud market, but its growth rate of 19% lags behind competitors that are experiencing growth rates above 30%. This slower growth raises concerns about AWS's position in the increasingly competitive landscape of AI workloads.

The labor market is showing signs of cooling, with recent revisions indicating a slower decline in job growth than previously anticipated. The tech sector added nearly 7,000 jobs in January, but the tech unemployment rate has risen slightly to 2.9%. A survey revealed that over 75% of businesses are struggling to meet their IT talent needs, particularly in areas like machine learning and cybersecurity. This has led many companies to focus on upskilling existing employees to address the talent shortage.

In the small business sector, transactions rose by 5% in 2024, with a notable increase in technology-related acquisitions. Despite inflation and rising costs, demand for stable, recession-resilient businesses is growing, prompting brokers to predict an increase in seller financing amid tight lending conditions. The surge in technology transactions indicates a strong interest in IT services and software firms, which may be well-positioned for growth and acquisitions in the current market environment.

Microsoft's Copilot Plus PCs have struggled to gain traction in the market, with disappointing sales figures attributed to high prices and a lack of compelling applications. Consumers are not actively seeking AI features, highlighting a disconnect between marketing efforts and real-world demand. This situation underscores the broader challenges of AI adoption, as companies like Microsoft work to clarify the value of their products in a competitive landscape.

Four things to know today

00:00 Tech Talent in Demand as Companies Struggle to Fill AI and Cloud Roles

05:33 Copilot+ PCs Struggle as Shoppers Say ‘No Thanks’ to AI Upgrades

06:55 Amazon’s Profits Jump, But Is AWS Falling Behind in the AI Cloud Race?

09:13 SolarWinds Sells for $4.4B—And N-Able Might Be Next

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