Amazon Web Services Shows Astonishing Growth Again

Amazon’s cloud computing service, Amazon Web Services (AWS), is growing fast — very fast.

AWS essentially rents computing power to a variety of startups, government agencies and other corporations. Year over year, AWS continues to see a 55 percent growth rate. Some say, soon, AWS may subsidize Amazon’s retail operations — if it isn’t already.

Amazon’s recent earnings have apparently disappointed some investors. But AWS reportedly took in $3.2 billion in revenue in the third quarter of 2016. While only about 11 percent of Amazon retail’s $29 billion in earnings, AWS’ margins are much higher — $1 billion compared to Amazon retail’s $360 million. AWS is expected to reach a total of $10 billion in sales by the end of this year.

Some are even starting to compare the use of AWS to a tax, as it is so widely used by so many companies. Social Capital’s VC investor, Chamath Palihapitiya was quoted as saying, “AWS is a tax on the comput[ing] economy … more companies than not will be using AWS versus building their own infrastructure. If you believe that, over time, the software industry is a multi-, deca-trillion industry, then ask yourself how valuable a company would be who taxes the majority of that industry.”

AWS currently accounts for over 45 percent of the revenue generated by public “Infrastructure-as-a-Service” providers — more than competitors Microsoft, Google and IBM combined.

Most recently, small business cloud accounting firm Xero attributed a net $19 million loss in Q3 on migrating to AWS, and the U.S. National Geospatial-Intelligence Agency (NGA) continues to move toward AWS cloud services for its encrypted classified and unclassified networks.


Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.

Click to comment