AWS breaks billion-dollar barrier, crushes competition
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.