Amazon publishes AWS stats – a fat, growing, profitable business

Amazon has been quite secretive when it comes to breaking out its revenues – for instance it has never told anyone how many Kindles have been shipped. However in its Q1 results it decided to split out the revenues and operating income of AWS for the first time. I’ve estimated both by quarter, showing them in the Figure, using a rolling 4 quarter analysis. You’ll want to think about the consequences for the growth of cloud services in general and IaaS in particular.
Well actually Amazon has been giving those of us interested in sizing the cloud computing market a hint for some time – indicating that AWS revenues were a major part of its ‘Other’ category split out in its quarterly numbers. With an annual revenue of $5b AWS appears to be behind IBM, which claimed annual cloud revenues of $7.7b in its own Q1 results. However it’s difficult to compare the 2 – IBM has a broader range of services including lots of SaaS, which has a ‘run rate’ of $3.8b: I interpret that as meaning its not that big yet, although it said it had grown these revenues by a $1b in the last year. In my view IBM certainly has less revenues from IaaS – the main staple of Amazon’s cloud business. It may also include hardware, software and services used to build private and hybrid clouds for its customers – a business difficult (an even perhaps irrelevant) to separate from ‘traditional IT’ engagements.

Amazon also announced ‘operational income’ for AWS, which was a nice healthy $265m for the quarter. It’s difficult to see how this measurement fits, but it looks a lot healthier than Amazon’s overall reported net loss of $57m. AWS and other public clouds got a lot of criticism last year from systems vendors as the price of their services dropped significantly, especially in cloud storage areas. The downward tick is shown in my Figure.

Publishing AWS numbers is a boon for those of us who try to size and forecast cloud services – so ‘thank you’ Amazon. It shows that this is a big, growing, profitable business. Who knows, it could be part of a smartening up process before being sold… perhaps to another systems supplier wanting to compete head to head with IBM. As I predicted – 2015 is proving to be ‘the year of the revenue cloud‘.