Amazon Web Services (AWS) Cloud is a $5 Billion Business and Growing Fast – Jeff Bezos
Amazon.com, Inc (AMZN) announced its much awaited Q1 2015 earnings today. Amazon’s revenue increased 15% to $22.72 billion in this quarter, compared with $19.74 billion in Q1 2014. Operating cash flow increased 47% to $7.84 billion for the trailing twelve months, compared with $5.35 billion for the trailing twelve months ended March 31, 2014. Operating income increased 74% to $255 million in the first quarter, compared with operating income of $146 million in first quarter 2014.
The company continues its journey of loss making. Net loss was $57 million in Q1 2015, or $0.12 per diluted share, compared with net income of $108 million, or $0.23 per diluted share, in Q1 2014.
For the first time, Amazon has broken down and highlighted Amazon Web Services (AWS) cloud financials separately. Effective Q1 2015, Amazon.com, Inc. was formed into three segments: North America, International, and AWS. These segments reflect changes in the way Amazon.com, Inc. evaluates its business performance and manages its operations.
The AWS segment consists of amounts earned from sales of compute, storage, database, and other AWS service offerings for start-ups, enterprises, government agencies, and academic institutions. The company reported $1.57B in Q1 2015 compared to $1.05B in Q1 2014 which is pretty strong growth of almost 50%. AWS also reported profits of $265 million, up from $245 million a year ago.
“Amazon Web Services is a $5 billion business and still growing fast — in fact it’s accelerating,” said Jeff Bezos, founder and CEO of Amazon.com. “Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon. We strive to focus relentlessly on the customer, innovate rapidly, and drive operational excellence. We manage by two seemingly contradictory traits: impatience to deliver faster and a willingness to think long term. We are so grateful to our AWS customers and remain dedicated to inventing on their behalf.”
There were several achievements that Amazon highlighted for AWS.
AWS announced Amazon Machine Learning, a fully managed service that makes it easy for any developer to use historical data to build predictive models that can be used for a broad array of purposes, including detecting problematic transactions, preventing customer churn, and improving customer support. Amazon Machine Learning is based on the same proven, highly scalable machine learning technology used by developers across Amazon to generate more than 50 billion predictions a week.
AWS announced AWS Marketplace for Desktop Apps, a new category on the AWS Marketplace that makes it easy for customers to search for and buy applications for their Amazon WorkSpaces cloud-based desktops. Customers can choose from a broad selection of more than 100 applications in eleven categories, and pay by the month for the applications they use. To simplify deployment of these desktop applications, AWS also announced Amazon WorkSpaces Application Manager (Amazon WAM), a new service that packages and delivers applications to Amazon WorkSpaces.
AWS announced the general availability of AWS Lambda, a compute service that runs developers’ code in response to events and automatically manages the required compute resources, making it easy to build and manage applications that respond quickly to new information. AWS also launched several new features to make it easy for mobile developers to use Lambda for mobile, tablet, and Internet of Things applications.
AWS announced the general availability of the Amazon EC2 Container Service, a high-performance container management service that makes it easy to run distributed applications using Docker containers on AWS. AWS also added the ability to use Elastic Block Store (“EBS”) and Elastic Load Balancing (“ELB”) with the EC2 Container Service, as well as a new, flexible container scheduler that combine to make the EC2 Container Service the best place to run containers in production.
AWS introduced the latest generation of Amazon EC2 Dense-storage (D2) instances, and larger, faster Amazon Elastic Block Storage (AmazonEBS) volumes. To support very large transactional databases and big data analytics, the new Amazon EC2 D2 instances offer up to 48 TB of storage and up to 3,500 MB per second of disk read throughput, while the new Amazon EBS volumes store up to 16 TB and process up to 20,000 input/output operations per second (IOPS).
Today’s report on AWS confirms that cloud is a real business. Analysts and technologists will be interested in how the cloud business can be further broken down into Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) units. The expectation would be same for Microsoft (MSFT) Azure and Google (GOOG) cloud.
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