6 ms·

> So, if this graph is right, then over the last couple of years, somewhere between 50% and 80% of Amazon’s profit has been due to AWS.

by orf 6y ago

NickBusey 6y ago
What makes this even more bonkers to me is this is from something most non-tech people haven’t even heard of.
- stu2b50 6y ago
  That makes sense honestly, B2B SaaS is lucrative, steady, and honestly probably moreso than a B2C business could be. Many of the big software players most people have never heard of. As a consumer, you're almost certainly in a Salesforce system somewhere, but most people have no idea what Salesforce is.
- mulmen 6y ago
  I wonder what the equivalent is for tech people. What is an enormous industry-specific business we have never heard of?
  - scylla 6y ago
    Pharmaceutical Distribution - How many people have heard of McKesson?
    - ByteJockey 6y ago
      Oh god. I've worked at a place that uses their apis.
  - djohnston 6y ago
    I am always amazed when I listen to my rancher buddy talk about cattle prices on weekly calls. There are so many industries I'm completely oblivious to.
  - teruakohatu 6y ago
    Agriculture, including farming (mid sized or larger), fertilizer distribution and manufacturing and seeds.
    - mulmen 6y ago
      I actually have agriculture experience. That's how I paid for college. You're absolutely right but I bet there's more than one AWS. I think many people have heard of John Deere and Monsanto but what about McGregor? They may not be as big as AWS but even with Ag experience I bet there are bigger similar organizations. I bet there are big custom harvest operations too. We had a two man operation on the Palouse but I heard stories about huge operations out of Texas that migrated through the midwest following harvest cycles.
  - jfim 6y ago
    Since this is such a great question, I've posted an "Ask HN" about it: https://news.ycombinator.com/item?id=23534529 https://news.ycombinator.com/item?id=23534529
    - deleted 6y ago
      [deleted]
  - kamyarg 6y ago
    The steel production and raw materials industry is a whole different world. I am not knowledgable in the area at all but a recent linkedin post by a friend was listing the biggest steel producers by country, I did not recognise any names except Tata from India and Thyssenkrupp from Germany. Here is a list I found from a quick search, try to guess which country the biggest producers is based in or how many of top 5 you expect to have heard of before opening the link. https://en.wikipedia.org/wiki/List_of_steel_producers https://en.wikipedia.org/wiki/List_of_steel_producers
    - jfim 6y ago
      I didn't even know Thyssenkrupp did things other than elevators.
      - kamyarg 6y ago
        "In February 2020, Thyssenkrup AG's board announced that it would sell its elevator segment to Advent International ... " https://en.wikipedia.org/wiki/ThyssenKrupp https://en.wikipedia.org/wiki/ThyssenKrupp This just keeps getting more interesting.
    - mulmen 6y ago
      This is actually pretty amazing. I predicted that the top few would be US based companies but I hadn't heard of them because they are rounding errors. I was wrong about that but the first US based steel company on the list is in my neighborhood. I ride up to their plant on my daily bike ride.
    - kbenson 6y ago
      That is a lot of Chinese steel, at what looks to be about 25% of the total worldwide production, just by the companies listed in the top 41. It looks like possibly a majority of worldwide production isn't in this list (which seems to gut off at less than 10 million tonnes), so it's possible it's even higher, if there's a lot of small steel companies based in China as well.
rvz 6y ago
Which Amazon has thanked almost everyone and their grocery stores for jumping on their bandwagon and spending nearly all their VC money on these services. Those without any significant revenues will have a hard-time paying up that huge AWS bill if they dared to use K8s or auto-scaling features. I would not want to look at the balance sheet of a companies accounts or quarterly earnings if they cannot generate lots of revenue to pay that AWS bill.
- echelon 6y ago
  Under these circumstances, how is AWS lock-in and cost escalation any different from Oracle of the past? Why would any startup shackle themselves to AWS or any cloud when it's not portable? Lambdas, in particular, seem like the worst idea in the history of ideas. Once your org adopts them, how do you keep track of these mysterious, business-critical pieces of functionality? How do you ever plan to port them to something else? It seems like you become an Amazon customer forever. I am incredibly skeptical of cloud at this point. If the other infrastructure and platform concerns of OS upgrades, patches, etc. were handled in an automated way, I'd strongly consider running Kubernetes on bare metal. Data centers and colocation all the way. I'm eager for self-management of k8s, DBs, Redis, etc. to be automated with tooling. On-prem, but easy to maintain. edit: wow, from +3 to 0 after an hour. I maintain that I articulated my opinion well in an unbiased way.
  - chrisco255 6y ago
    Lambdas, at least the JS ones, are Node.js based and not hard at all to migrate to an alternative cloud service. You can even use a framework that handles all the cloud-specific functionality for you and works across AWS, Azure, GCloud, etc: https://www.serverless.com/ https://www.serverless.com/ The lock-in really comes from AWS-specific services. Redis, Mongo, etc will have the same API no matter where you're hosting them, so it's pretty trivial to point your client-side code to a different cloud-hosted Redis instance if you find AWS lacking there.
    - mwakerman 6y ago
      I agree and just want to add IAM to the list of AWS Lock In services. We provisions environments almost entirely using Config-as-code tools (packer, ansible, terraform) and generally have a good blueprint for what an environment looks like and the parts I’ve had the hardest time thinking about migrating to another cloud provider is all the IAM rules that magically give hosts/services the ability to talk to other services.
fragsworth 6y ago
It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to start raising prices. I am pretty sure Amazon's retail business is going to completely dwarf AWS in the long term, because they are currently willing to break even on it (and possibly lose money) just to outdo the competition.
- runawaybottle 6y ago
  Competing on price never pays off imho. You’ll race to the bottom. Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. My experience: I once tried to corner the market on WoW gems by buying out the undercutters and setting my desired price. My money wasn’t long enough. I really don’t think anyone’s money is long enough :p
  - dylan604 6y ago
    Cornering the real world silver market is a tough thing to do as well. Just ask the Hunt brothers. https://en.wikipedia.org/wiki/Silver_Thursday https://en.wikipedia.org/wiki/Silver_Thursday
  - c1b 6y ago
    Yes this example is very pertinent to Amazons profit strategy thank you for sharing.
    - runawaybottle 6y ago
      Waiting for some Eve fans to share their economic exploits.
  - monocasa 6y ago
    I think they're viewing it instead as continuing to reinvest profits until they're a cyberpunk level corporate power. It's not that they're cutting prices, it's that they're using the excess to buy companies like Whole Foods and vertically integrate them rather than paying out to shareholders, or building a bigger war chest in an index fund.

> So, if this graph is right, then over the last couple of years, somewhere between 50% and 80% of Amazon’s profit has been due to AWS.

by orf 6y ago

> So, if this graph is right, then over the last couple of years, somewhere between 50% and 80% of Amazon’s profit has been due to AWS.

NickBusey 6y ago

What makes this even more bonkers to me is this is from something most non-tech people haven’t even heard of.

stu2b50 6y ago
That makes sense honestly, B2B SaaS is lucrative, steady, and honestly probably moreso than a B2C business could be. Many of the big software players most people have never heard of. As a consumer, you're almost certainly in a Salesforce system somewhere, but most people have no idea what Salesforce is.
mulmen 6y ago
I wonder what the equivalent is for tech people. What is an enormous industry-specific business we have never heard of?
- scylla 6y ago
  Pharmaceutical Distribution - How many people have heard of McKesson?
  - ByteJockey 6y ago
    Oh god. I've worked at a place that uses their apis.
- djohnston 6y ago
  I am always amazed when I listen to my rancher buddy talk about cattle prices on weekly calls. There are so many industries I'm completely oblivious to.
- teruakohatu 6y ago
  Agriculture, including farming (mid sized or larger), fertilizer distribution and manufacturing and seeds.
  - mulmen 6y ago
    I actually have agriculture experience. That's how I paid for college. You're absolutely right but I bet there's more than one AWS. I think many people have heard of John Deere and Monsanto but what about McGregor? They may not be as big as AWS but even with Ag experience I bet there are bigger similar organizations. I bet there are big custom harvest operations too. We had a two man operation on the Palouse but I heard stories about huge operations out of Texas that migrated through the midwest following harvest cycles.
- jfim 6y ago
  Since this is such a great question, I've posted an "Ask HN" about it: https://news.ycombinator.com/item?id=23534529 https://news.ycombinator.com/item?id=23534529
  - deleted 6y ago
    [deleted]
- kamyarg 6y ago
  The steel production and raw materials industry is a whole different world. I am not knowledgable in the area at all but a recent linkedin post by a friend was listing the biggest steel producers by country, I did not recognise any names except Tata from India and Thyssenkrupp from Germany. Here is a list I found from a quick search, try to guess which country the biggest producers is based in or how many of top 5 you expect to have heard of before opening the link. https://en.wikipedia.org/wiki/List_of_steel_producers https://en.wikipedia.org/wiki/List_of_steel_producers
  - jfim 6y ago
    I didn't even know Thyssenkrupp did things other than elevators.
    - kamyarg 6y ago
      "In February 2020, Thyssenkrup AG's board announced that it would sell its elevator segment to Advent International ... " https://en.wikipedia.org/wiki/ThyssenKrupp https://en.wikipedia.org/wiki/ThyssenKrupp This just keeps getting more interesting.
  - mulmen 6y ago
    This is actually pretty amazing. I predicted that the top few would be US based companies but I hadn't heard of them because they are rounding errors. I was wrong about that but the first US based steel company on the list is in my neighborhood. I ride up to their plant on my daily bike ride.
  - kbenson 6y ago
    That is a lot of Chinese steel, at what looks to be about 25% of the total worldwide production, just by the companies listed in the top 41. It looks like possibly a majority of worldwide production isn't in this list (which seems to gut off at less than 10 million tonnes), so it's possible it's even higher, if there's a lot of small steel companies based in China as well.

rvz 6y ago

Which Amazon has thanked almost everyone and their grocery stores for jumping on their bandwagon and spending nearly all their VC money on these services. Those without any significant revenues will have a hard-time paying up that huge AWS bill if they dared to use K8s or auto-scaling features. I would not want to look at the balance sheet of a companies accounts or quarterly earnings if they cannot generate lots of revenue to pay that AWS bill.

echelon 6y ago
Under these circumstances, how is AWS lock-in and cost escalation any different from Oracle of the past? Why would any startup shackle themselves to AWS or any cloud when it's not portable? Lambdas, in particular, seem like the worst idea in the history of ideas. Once your org adopts them, how do you keep track of these mysterious, business-critical pieces of functionality? How do you ever plan to port them to something else? It seems like you become an Amazon customer forever. I am incredibly skeptical of cloud at this point. If the other infrastructure and platform concerns of OS upgrades, patches, etc. were handled in an automated way, I'd strongly consider running Kubernetes on bare metal. Data centers and colocation all the way. I'm eager for self-management of k8s, DBs, Redis, etc. to be automated with tooling. On-prem, but easy to maintain. edit: wow, from +3 to 0 after an hour. I maintain that I articulated my opinion well in an unbiased way.
- chrisco255 6y ago
  Lambdas, at least the JS ones, are Node.js based and not hard at all to migrate to an alternative cloud service. You can even use a framework that handles all the cloud-specific functionality for you and works across AWS, Azure, GCloud, etc: https://www.serverless.com/ https://www.serverless.com/ The lock-in really comes from AWS-specific services. Redis, Mongo, etc will have the same API no matter where you're hosting them, so it's pretty trivial to point your client-side code to a different cloud-hosted Redis instance if you find AWS lacking there.
  - mwakerman 6y ago
    I agree and just want to add IAM to the list of AWS Lock In services. We provisions environments almost entirely using Config-as-code tools (packer, ansible, terraform) and generally have a good blueprint for what an environment looks like and the parts I’ve had the hardest time thinking about migrating to another cloud provider is all the IAM rules that magically give hosts/services the ability to talk to other services.

fragsworth 6y ago

It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to start raising prices. I am pretty sure Amazon's retail business is going to completely dwarf AWS in the long term, because they are currently willing to break even on it (and possibly lose money) just to outdo the competition.

runawaybottle 6y ago
Competing on price never pays off imho. You’ll race to the bottom. Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. My experience: I once tried to corner the market on WoW gems by buying out the undercutters and setting my desired price. My money wasn’t long enough. I really don’t think anyone’s money is long enough :p
- dylan604 6y ago
  Cornering the real world silver market is a tough thing to do as well. Just ask the Hunt brothers. https://en.wikipedia.org/wiki/Silver_Thursday https://en.wikipedia.org/wiki/Silver_Thursday
- c1b 6y ago
  Yes this example is very pertinent to Amazons profit strategy thank you for sharing.
  - runawaybottle 6y ago
    Waiting for some Eve fans to share their economic exploits.
- monocasa 6y ago
  I think they're viewing it instead as continuing to reinvest profits until they're a cyberpunk level corporate power. It's not that they're cutting prices, it's that they're using the excess to buy companies like Whole Foods and vertically integrate them rather than paying out to shareholders, or building a bigger war chest in an index fund.