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That said, AWS has something like 80% profit margin [1] vs almost no margin for the rest of the business :) [1] http://venturebeat.com/2013/09/05/amazons-mount
by omonra 12y ago
That said, AWS has something like 80% profit margin [1] vs almost no margin for the rest of the business :)
[1] http://venturebeat.com/2013/09/05/amazons-mountain-of-margin-in-cloud-services-over-80-profit/ http://venturebeat.com/2013/09/05/amazons-mountain-of-margin...
- rgbrenner 12y agoI agree that AWS almost certainly has a great profit margin.. but that article includes no details. He says AWS has X in costs, trust me. I have no idea how he arrived at that number.
- sharpy 12y agoDisclaimer: I'm a software engineer working for AWS. But not on EC2. I feel the margin number conclusion is deeply flawed for variety of reasons. There are some questions the author cannot have answers for, that greatly change the margin numbers for EC2. A couple that comes to mind are: 1. What percentage of time are customers being charged for the available servers? 2. What percentage of instance hours are being charged at on-demand prices, vs reserved instance? Also it completely ignores services that makes EC2 stand out from plain hosting, and adds much value, such as AutoScaling, CloudWatch, Elastic Load Balancing, OpsWorks, and Elastic BeanStalk. And believe me when I say that support cost is NOT trivial. In many cases, the number of engineer hours involved makes the support pricing look like a real bargain.
- saosebastiao 12y agoEven if this analysis was correct, it doesn't say anything about the margins of the rest of the business. There is plenty of gross margin in almost every business Amazon is involved in, but it will never show up in the net profit line until Amazon decides to stop reinvesting every cent of cash flow.