Making four times more than Azure

AWS breaks billion-dollar barrier, crushes competition

Elliot Bentley
aws-crush2

Amazon Q3 results reveal record sales for cloud service, while Microsoft and Co. eat dust.

 

No longer just
“a company that sells books”
, Amazon has spent the past few
years creating an entirely new market in its cloudy Amazon Web
Services offerings. And despite fierce new competition, it
continues to dominate the market, this quarter breaking the $1bn
mark.

It’s difficult to judge precisely how much money
AWS alone is making, since it’s lumped in with advertising services
and co-branded credit cards in the “other” category on the public
balance sheets. However, net sales of this “other” category reached
$1.011 billion this quarter – almost double those of Q3 2012 (a
paltry $648m).

 

In a press release, CEO Jeff Bezos himself
highlighted
“a big government contract”
as one of AWS’s
achievements over the past year. The release also claimed that
“more than 2,400 education institutions and 600 government
agencies” are making use of its cloud services.

Operating cash flow for the company as a whole
over the past twelve months was $4.98 billion, up a whopping 48%
from the previous year. However, the last quarter saw Amazon making
a traditional loss as it ploughed its profits straight back into
business development.

AWS rarely makes the headlines itself (aside
from
internet-breaking outages
), gradually
rolling out new features and price cuts incrementally. The past
twelve months have seen the introduction of barely noteworthy
developments such as
PaaS-like OpsWorks
and –
finally – an official Command Line
Interface.

Yet while wannabes like Microsoft Azure, Google
Cloud Services and OpenStack have arguably garnered more column
inches with AWS-challenging initiatives, they’re still far behind.
Microsoft made a big fuss when Azure
broke $1bn in annual sales
, and Google’s
cloud services
aren’t far behind
– but AWS is now raking in
that figure quarterly.

The emergence of these giants, and their
grabbing of the lion’s share of the market, may hurt the industry
in the long-term. As JAXenter reported at the start of the month,
Canalys CEO Steve Brazier predicts a
“devastating cost crunch”
as providers attempt to
out-compete Amazon prices.

Still, Amazon’s momentum seems unlikely to end
anytime soon. The second AWS re:Invent
conference
is taking place in Las Vegas next
month, and may see the announcement of further price cuts, or
perhaps the launch of a big new service.
Last year
, the company announced a new data
warehousing service, RedShift, and a massive drop in S3
prices.

Photo by Andrew
Mager
.

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