Feeds

Amazon's cloud on track for $2bn in revenue in 2013

AWSome cloud swells with cash, objects

Security for virtualized datacentres

Analysis Bezos & Co's cloud looks likely to turn over at least $2bn in 2013 and potentially much more – a fact sure to put the frighteners on traditional IT suppliers scrabbling to come up with their own as-a-service infrastructure products.

Amazon recorded revenues of $750m within its "Other" category in the first quarter of 2013, up $252m from the $458m reported in the first quarter of 2012, and down as per usual a shade from the final quarter of 2012's $769m, the company reported on Thursday.

If earnings for Other for 2013 follow the standard pattern of not falling below Q1's amount throughout the year – and we think they'll actually go up significantly – then Other is set to book a minimum of $3bn in revenue for the year, and probably closer to $4bn.

Like all cloud companies, those sneaky Amazonians don't want to make it easy for competitors, the press, and financial firms to analyze cloud revenues, so the North American Other category folds AWS revenues in with co-branded credit card agreements and advertising services.

But we believe the rapid expansion in revenues in Other since the mid-2006 introduction of the storage service (S3) and the compute service (EC2) point to major growth within AWS. We have neither seen nor heard of any compelling evidence for dramatic advertising growth and, given the woeful state of the ad industry with falling rates at Google, we doubt it's growing like a weed.

In talking with industry insiders, CEOs at other cloud companies, and analysts, we here at Vulture West have come to believe that AWS represents at least 75 per cent of "Other", and could even be higher – one source told us in late 2012 that they expected AWS would run to $2bn in 2012 out of total revenues of $2.385bn.

AWS revenues look like they're climbing

Amazon's AWS-concealing product division is booking record revenues

By our reckoning, that puts AWS on track to make Amazon a shade over $2.25bn in 2013 in the unlikely scenario that we see no quarter-on-quarter increase, and potentially much more if there's quarterly growth like in past years.

Another indication for the growth of AWS lies in the dramatic increase in the amount of objects being stored in the S3 cloud, which shows a major year-on-year increase in use of the service, going from a shade under a trillion stored objects in early 2012 to "over" 2 trillion by Q2 2013.

Amazon S3 now stores 2 trillion objects

More and more Amazon S3 objects are being stored as well

Besides the storage growth, the company added 159 features and services to the cloud in 2012 – an example that Bezos highlighted to shareholders in the company's annual report as an example of "internally driven motivation".

But though some of these new features – Glacier, Redshift, Trusted Advisor – may drive new revenue, we believe that the growth in AWS has more to do with the 27 price cuts the company has enacted since launching the service in 2006. This scorched-earth pricing strategy has led to an ongoing race to the bottom on cloud prices between Amazon, Google, and Microsoft, and has spawned a wave of startups that wouldn't exist were it not for these clouds.

So next time you tune into Netflix, save a file in Dropbox, or spin up an application on Heroku, bear in mind that each time you use one of those services you lead to a higher spend on AWS, and enlarge the scale advantages the cloud can use when putting the pricing-frighteners on its competition. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
IBM storage revenues sink: 'We are disappointed,' says CEO
Time to put the storage biz up for sale?
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
Symantec backs out of Backup Exec: Plans to can appliance in Jan
Will still provide support to existing customers
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.