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If the leap to AWS had not happened, Amazon would likely not be here today. All of Amazon's operating income comes from AWS. The other departments ranging fro

by IncRnd 9y ago

If the leap to AWS had not happened, Amazon would likely not be here today. All of Amazon's operating income comes from AWS. The other departments ranging from moon launches to book selling are just cost centers. http://www.zdnet.com/article/all-of-amazons-2017-operating-income-comes-from-aws/ http://www.zdnet.com/article/all-of-amazons-2017-operating-i... http://www.businessinsider.com/amazon-web-services-cloud-online-shopping-profits-chart-2017-5 http://www.businessinsider.com/amazon-web-services-cloud-onl... https://www.geekwire.com/2016/amazon-without-aws-online-retailer-posted-big-loss-not-booming-cloud-business/ https://www.geekwire.com/2016/amazon-without-aws-online-reta...

kgwgk 9y ago
“Cost center” doesn’t mean “unprofitable department”. And actually two of the three segments appearing in Amazon financial reports are profitable.
- IncRnd 9y ago
  > “Cost center” doesn’t mean “unprofitable department”. That's unnecessarily pedantic. A cost center is an organizational subunit that incurs cost but does not directly contribute to the company’s profits. Since I said "department" and "cost center" it really should be clear what was meant. Why, it is just like the article itself using "Amazon" as both a noun and a verb! > And actually two of the three segments appearing in Amazon financial reports are profitable. Amazon had 6 segments in 2017 not 3. If you look at the Operating Profit, Operating Margin, and P/E considering the context of my comment about AWS vs. the other departments, I think you will see why AWS has kept Amazon (and AMZN) afloat.
  - kgwgk 9y ago
    Using “cost center” in the first place was unnecessarily pedantic. And wrong. According to note 11 in the annual report for 2017 “We have organized our operations into three segments: North America, International, and AWS.”
- Spooky23 9y ago
  I would be skeptical. They conjured up profits when the analysts finally demanded it. My guess is that Amazon will be the next big accounting scandal. I doubt anyone truly understands how the company works. AWS has a big head start, but the margins aren’t going to last as Microsoft and Google grow. Once one of them decide to buy the business by slashing network costs, poof.
  - mooreds 9y ago
    I dunno. Depends on how rapidly folks move away from AWS to other clouds. And that to some extent depends on lock in. If all you are doing on AWS is ec2/vpc, moving to gcp is pretty easy. But if you are leveraging any of the proprietary tech like kinesis, lambda or sqs, it's going to take an application rewrite. Which means that it will have to be a very compelling price break. I don't have a good feeling for what the product penetration is for non IAAS services is. Now, for green field development, where there's no legacy AWS integration, pricing becomes a lot more important.

by IncRnd 9y ago

kgwgk 9y ago

“Cost center” doesn’t mean “unprofitable department”. And actually two of the three segments appearing in Amazon financial reports are profitable.

IncRnd 9y ago
> “Cost center” doesn’t mean “unprofitable department”. That's unnecessarily pedantic. A cost center is an organizational subunit that incurs cost but does not directly contribute to the company’s profits. Since I said "department" and "cost center" it really should be clear what was meant. Why, it is just like the article itself using "Amazon" as both a noun and a verb! > And actually two of the three segments appearing in Amazon financial reports are profitable. Amazon had 6 segments in 2017 not 3. If you look at the Operating Profit, Operating Margin, and P/E considering the context of my comment about AWS vs. the other departments, I think you will see why AWS has kept Amazon (and AMZN) afloat.
- kgwgk 9y ago
  Using “cost center” in the first place was unnecessarily pedantic. And wrong. According to note 11 in the annual report for 2017 “We have organized our operations into three segments: North America, International, and AWS.”
Spooky23 9y ago
I would be skeptical. They conjured up profits when the analysts finally demanded it. My guess is that Amazon will be the next big accounting scandal. I doubt anyone truly understands how the company works. AWS has a big head start, but the margins aren’t going to last as Microsoft and Google grow. Once one of them decide to buy the business by slashing network costs, poof.
- mooreds 9y ago
  I dunno. Depends on how rapidly folks move away from AWS to other clouds. And that to some extent depends on lock in. If all you are doing on AWS is ec2/vpc, moving to gcp is pretty easy. But if you are leveraging any of the proprietary tech like kinesis, lambda or sqs, it's going to take an application rewrite. Which means that it will have to be a very compelling price break. I don't have a good feeling for what the product penetration is for non IAAS services is. Now, for green field development, where there's no legacy AWS integration, pricing becomes a lot more important.