Over the past couple of years, the cloud services arm of Amazon, Amazon Web Services has grown in prominence along with the thriving e-commerce business. The recent fourth quarter results of AWS further testify this fact as AWS generated about 40% of the consolidated segment operating income of Amazon despite contributing just 7% of the sales.
o It generated $687 million as the operating income which nearly tripled from the $240 million last year.
Overall, in the year 2015, AWS made nearly $8 billion in revenues and earned almost $1.9 billion in profits. In fact, AWS profits are now nearly equal to the entire e-commerce division of Amazon in North America.
AWS remains the top choice of many companies who are increasingly shifting a majority of their infrastructure components to the cloud.
During the latest investor call, AWS has pegged its number of customers at 1 million. Many top companies, including Netflix, GE, Spotify are using the AWS cloud services.
During an Amazon Web Services conference in Las Vegas in October, GE had said that they were planning to bring down their number of data centres from 34 to 4 and moving the remaining to the AWS cloud.
At GE Oil and Gas, over half of the core applications already run on AWS and GE is further planning to migrate over 9,000 workloads into AWS over the next three years. .
Clearly, AWS has emerged as the top cloud service provider for many companies and is way ahead of its competitors which include Microsft Azure, Google Cloud Platform and IBM SoftLayer.
According to Synergy Research Group, the market for cloud services is expected to increase to $27.4 billion in 2016 up from $14.9 billion in 2014. Over half of this market expected to be in the Infrastructure As a Service segment in which AWS is the clear leader.
During the third quarter of 2015, AWS had 44% of the market share followed by 9%, share of Microsoft, 4.8% IBM, and 3.8% Google. However, the growth rate of revenue of AWS has slowed down as AWS had recorded 78% growth in the third quarter and 82% in the second quarter compared to the 69% in the latest report.
This is due to the rising popularity of Azure cloud services by Microsoft whose sales doubled during the same period registering about 140% growth.
However, one cannot really compare the two as Microsoft does not disclose the earnings of its cloud division as Amazon does with AWS. Instead, Microsoft uses the term “Intelligent Cloud” segment which, in addition to Azure, also includes its broad range of enterprise services and products.
In their latest quarterly financial results, Microsoft had said that the Intelligent Cloud segment earned overall revenues of $6.34 billion out of which revenue from server products plus Azure was about $5.1 billion with consulting and support forming the remaining part.
The profit of the segment stood at $2.58 billion which was down 1% from the last year, however, there is no way to figure out the share of Azure cloud services from this number.
For now, one can safely say AWS is at the top in cloud services with major companies as its clients, but its other competitors, particularly Microsoft Azure may gradually be catching up with it — an surely at a time when Azure saw a whopping 140% increase in revenues for Microsoft.