Feeds

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

AWSome cloud swells with cash, objects

Top 5 reasons to deploy VMware with Tegile

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. ®

Beginner's guide to SSL certificates

More from The Register

next story
BOFH: WHERE did this 'fax-enabled' printer UPGRADE come from?
Don't worry about that cable, it's part of the config
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
Yahoo! blames! MONSTER! email! OUTAGE! on! CUT! CABLE! bungle!
Weekend woe for BT as telco struggles to restore service
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
Want to STUFF Facebook with blatant ADVERTISING? Fine! But you must PAY
Pony up or push off, Zuck tells social marketeers
Oi, Europe! Tell US feds to GTFO of our servers, say Microsoft and pals
By writing a really angry letter about how it's harming our cloud business, ta
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
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.
Getting ahead of the compliance curve
Learn about new services that make it easy to discover and manage certificates across the enterprise and how to get ahead of the compliance curve.