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The New York Times reports that Amazon unveiled the financial performance of its powerful growth engine for the first time on Thursday, and the numbers looked good, energized primarily by renting processing power to start-ups and, increasingly, established businesses. Amazon said in its first-quarter earnings report that its cloud division, Amazon Web Services, had revenue of $1.57 billion during the first three months of the year. What is more unusual at a company that often reports losses, the cloud business is generating substantial profits. The company said its operating income from AWS was $265 million.
Amazon helped popularize the field starting in 2006 and largely had cloud computing to itself for years, an enormous advantage in an industry where rivals usually watch one another closely. At the moment, there is no contest: Amazon is dominant and might even be extending its lead. Microsoft ranks a distant No. 2 in cloud computing but hopes to pick up the slack with infrastructure-related services it sells through Azure, the name of its cloud service.
“Microsoft is a credible player,” says Lydia Leong. But, she added, “Amazon is the most common platform for start-ups.” Amazon executives have said they expect AWS to eventually rival the company’s other businesses in size. The cloud business has been growing at about 40 percent a year, more than twice the rate of the overall company and many Wall Street analysts have been hoping for a spinoff.
As for Google, the cloud was barely mentioned in Google's earnings call. Nor did the search giant offer any cloud numbers, making it impossible to gauge how well it is doing. But the enthusiasm of Eric Schmidt, Google’s executive chairman, was manifest when he spoke at an event for cloud software developers this week. “The entire world will be defined by smartphones, Android or Apple, a very fast network, and cloud computing,” said Schmidt. “The space is very large, very vast, and no one is covering all of it.”
(Score: 4, Interesting) by PizzaRollPlinkett on Saturday April 25 2015, @10:27AM
So how does any one cloud provider differentiate race-to-the-bottom commodity computing? It's just a Linux instance running on commodity hardware. Microsoft, IBM, and the others have little chance of winning since Amazon is able to operate at a loss apparently indefinitely, pricing things below cost. It's like the business version of cold fusion. Can Amazon sustain it indefinitely? I have never figured out what investors get out of Amazon. Amazon's goal is to destroy other companies' ability to make a profit, and then destroy themselves. Why do people give them money? Where I went wrong was that I took economics before the "Internet economy" and learned about revenues, earnings, and stuff like that. I just don't get the "Internet economy" where companies operate without revenues or even a plan to get revenues, and Amazon perpetually operates at a loss but investors don't care. I guess I should stick to writing code.
(E-mail me if you want a pizza roll!)
(Score: 0) by Anonymous Coward on Saturday April 25 2015, @11:14AM
Marketing.
(Score: 2) by Bot on Saturday April 25 2015, @04:34PM
You raise a very good point. What good is Amazon for investors.
My answer is, if the investors are banks, Amazon makes perfect sense: you have it as competitor, your business falls on hard times, you become roadkill for the bank. If they are normal investors, well good luck.
Rethinking the whole financial sector would be a nice idea, but I suspect the current system would survive a global thermonuclear war, so if it changes, it's probably to morph into a worse system.
Account abandoned.
(Score: 1) by SunTzuWarmaster on Saturday April 25 2015, @04:53PM
Have you messed around with their cloud computing products? You can set up a web software business with little-to-no coding. Here, let me make you a business model:
1 - Do market analysis and find out some obscure data type that needs automated labeling. Let's call it "pictures of girls wearing headphones.", for kicks. (http://www.headsethotties.com/).
2 - Use AMT Turkers to label a dataset of "headsets" and "no headsets", using sample images provided from your intended customers (this will cost you a few thousand dollars... $10K? $20K? Raise it from investors or bootstrap or whatever.)
3 - Use AWS to turn your AMT database into an AWS instance providing RESTful webservices using an authenticated key.
4 - Use AWS to automate the checkout/keyProvision service; hire a web designer to make you one of them "fancy startup pages" ($1K).
5 - Sell this as a subscription service for a multiple of whatever Amazon charges you for the processing ($5/month for up to 1000 images, when it costs you $1).
6 - Market. OMG market the hell out of it.
7 - Profit.
8 - Retire to Guatemala.
9 - Adjust price downwards as your service becomes commoditized when competitors enter the market.
You're right: you could have set up the same company, using your own servers, at a fraction of the cost. However, your business would have taken an additional month/two to come online (killing your first mover advantage), and will require maintenance (killing your Guatemalan retirement, and possibly your customer base). Amazon is providing a service, and businesses are paying for it. That service is not, actually, "processing". Rather, it is a stack of services based around the processing and integration.