
Amazon hints at sales figures for AWS - donohoe
http://qz.com/78754/amazon-doesnt-reveal-what-it-makes-on-cloud-computing-but-heres-the-number-anyway/
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gfodor
Given that this is revenue, and given that Amazon has a "market-share-or-
death" pricing model for margins, this really tells you nothing about AWS's
profitability. It could be running at a loss (it wouldn't surprise me.)

I'd be much more bullish on Amazon as an investor if they gave _any_ guidance
as to when they will actually start taking profits. There's just something
that feels wrong investing in a company that very well may _never_ become
profitable in my lifetime and whose share price will just float on hope for a
day that will never come.

I still think Amazon is an amazing company, but their approach to providing
shareholder value (the role of a public corporation) is definitely a little
unorthodox.

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binarysolo
As an AMZN shareholder for years, I guess I think of it the other way: I own
shares because I believe they provide value to me and society via service and
bringing about efficiency, and I as a proud shareholder am evaluating them in
such a metric, opposed to quarterly earnings numbers.

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gfodor
Right I guess the point I'm making is that once Amazon is forced to raise
margins, will they still be Amazon? If Amazon never raises margins, what's the
investment thesis? Something has to give.

The main theory is that Amazon is building up such a wide economic moat that
consumers are going to be willing to put up with higher prices or competitors
will still never be able to beat them on margins even when they start to take
profits. This is a pretty huge bet.

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Retric
I think AWS is a classic case of economies of scale enabling profitability
outside the reach of smaller companies. The AWS R&D get's reused for there
internal systems driving down the costs of running there internal systems. So
even if AWS only breaks even it's still a net win for the company.

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dpe82
AWS is of course huge, but many forget that Rackspace is in the same order of
magnitude at $1.3b yearly revenue last year and growing about 24%.

Source: <http://finance.yahoo.com/q/ks?s=rax>

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heelhook
I've heard from the CEO of a large company that partners with Amazon a very
similar figure for the revenue of AWS.

From the same source, I've heard that some services Amazon.com relies on runs
on competitors' infrastructure, even though AWS offers the same service, and
no, not as a backup service but as the primary solution for that particular
service.

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z-factor
They were using Akamai and not CloudFront last time I checked (which was a
while ago). And of course they must have legacy systems that were built before
their in-house solutions were available.

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donohoe
Whomever changed the Headline - thank you. Its much clearer than my
abbreviated one (original waaay too long)

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jedberg
Philosophical question: For companies that are conglomerates, or at least have
very different business units (like Amazon or GE or Microsoft), should those
companies be required by law to break out their earnings by major division?

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czr80
Impossible to enforce - companies are free to shift things around internally
to produce any numbers they want, as long as the totals are correct.

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bdcravens
VMWare reported twice as much revenue as (is derived for) AWS for the recent
quarter. AWS is cheaper, but even so, I'm trying to wrap my mind around how
that's possible.

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ihsw
VMWare makes money on support and integration, AWS on volume.

Amazon has historically taken their competitors to the cleaners on margins,
especially the dead tree publishers.

