AWS Is a Money-Making Machine
Amazon’s AWS is now a $10 billion a year business -- and AWS’s data management-related services contribute approximately $1 billion annually to this total. By the looks of it, that share is poised to grow -- perhaps even explode.
- By Steve Swoyer
- April 29, 2016
Amazon Inc.’s Amazon Web Services (AWS) is now a $10 billion-a-year business. That’s one take-away from Amazon’s Q1 earnings conference call this morning. It’s by no means the most surprising.
More notable is the incredible year-over-year performance of AWS itself, which grew by almost two-thirds (64 percent) from Q1 of 2015, reaching $2.6 billion. AWS is also quite profitable for Amazon, generating $604 million in operating income -- up from $195 million in 2015. (AWS is operating at a 23.5 percent margin relative to that year-ago period.) It gets better: stock-based compensation payouts ate into Amazon’s AWS margins; subtracting these, AWS generated $716 million in profit.
Most notable of all, perhaps, is the performance of Amazon’s data management (DM)-related AWS products. First, the rub: Amazon doesn’t break down AWS’ performance by products or services.
By piecing together bits and pieces from other contexts, however, we have a pretty good idea of how AWS is doing on the DM side. At its re:Invent 2015 event last October, for example, AWS senior vice president Andy Jassy indicated that AWS’ database-oriented services were generating $1 billion in annual revenue. That seems pretty definitive, but that was before the release of Relational Database Service (RDS) Aurora, Amazon’s new RDBMS service for AWS.
During today’s call, officials declined to update or revise this figure. However, Phil Hardin, Amazon’s director of investor relations, did speak to the “strong” growth of AWS’ data management offerings. He touted the performance of Aurora, in particular.
“We're not providing an update on the $1 billion stat. What I would say is that the AWS team has strong revenue growth across their suite of products,” he said. “The fastest-growing product in their history is actually Aurora, the new database. We're very excited about what we're seeing in that space but we're not breaking out the revenue for those various components today.
In a blog posting in early April, Merv Adrian, research vice president with Gartner Inc., put Amazon’s DBMS-related revenues at almost $834 million in 2015. Adrian, too, was mindful of the fact that Aurora’s impact hadn’t yet been measured, let alone felt. “[That’s] breathing down Teradata’s neck for the #5 spot [among DBMS vendors], and likely to move past them in 2016, given their current growth rate of 33 percent [growth] before the introduction of RDS Aurora,” he wrote.
Also during the call, CFO Brian Olsavsky stressed Amazon’s ongoing enhancement of AWS, noting that it releases hundreds of new features for AWS on a quarterly basis: “We usually quote the number of new features and services to you each quarter, we had 214 in Q1, up from 170 the first quarter of last year, so over 26 percent growth in this quarter alone coming off a year where I believe the number was 722 significant new features and services delivered for AWS customers.”
About the Author
Stephen Swoyer is a technology writer with 20 years of experience. His writing has focused on business intelligence, data warehousing, and analytics for almost 15 years. Swoyer has an abiding interest in tech, but he’s particularly intrigued by the thorny people and process problems technology vendors never, ever want to talk about. You can contact him at [email protected].