Cloud Trends: AWS Turns Profitable for Amazon

Are we witnessing a reversal of long-standing cloud trends?

In case you haven’t heard, Amazon Web Services makes money. Considering the fact that, overall, Amazon as a company has never turned a profit, this is actually news.

According to their April 23rd first-quarter statement, in fact, Amazon’s AWS segment generated more than a billion dollars in net sales in 2014, against just over $800 million in operating expenses. Year over year net sales grew by 49% in the first quarter of 2015. AWS currently has assets (property, equipment, and accounts receivable) of nearly seven billion dollars.

Amazon founder and CEO, Jeff Bezos, used the announcement to characterize AWS as “a $5 billion business and still growing fast – in fact, it’s accelerating.”
What makes this news remarkable is not just the fact that Amazon has never earned a profit, but the reason why: Bezos, and presumably his shareholders along with him, have a very high tolerance for risk. In principle, they’re not opposed to failure. (which, considering the fate of their investments in Kozmo.com, Askville.com, pets.com, and the Fire phone, is probably a good thing.)

Amazon has always been ready to invest huge amounts of money in potentially transformative cloud trends others found too frightening. So given Amazon’s willingness to invest heavily in long-term speculative projects, the fact that AWS is doing this well is very good news for everyone who relies on their services.

What do these cloud trends mean for us?

Which brings all of this back to Cloud Academy. We exist to provide world-class training in cloud computing skills. Cloud Academy students join our community to learn how to use the cloud to realize their personal and professional dreams. But you sometimes can’t help but wonder whether this very young technology really has the staying power to justify all the effort. Will the big cloud players still be around in a few years?

Based on last week’s announcement, we can be even more confident is saying that the short answer to that question is “yes.”

According to research firm Forrester (as reported by Wired), “cloud computing will account for about 15 percent of all information technology spending within the next five years.” Wired also reported that “big name financial services firm Deutsche Bank…estimated that Amazon’s haul is about ten times that of its nearest cloud competitor, Microsoft Azure.”

Or, in other words, AWS, that most trendy of cloud trends, is in a very good position to continue its dominance.

Now get back to your studies.

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Written by

David Clinton

A Linux system administrator with twenty years' experience as a high school teacher, David has been around the industry long enough to have witnessed decades of technology trend predictions; most of them turning out to be dead wrong.


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