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.


Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The PYMNTS Next-Gen AP Automation Tracker, is a monthly report that highlights the most recent accounts payable developments and automated solutions that are disrupting how businesses process invoices, track spending and earn rebates on transactions.

Click to comment


To Top