Amazon Web Services: Colossal, but Invincible?

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Amazon has revealed that its cloud services arm is growing very fast and is surprisingly profitable. An analysis of the strategy that underpins the exceptional performance of Amazon Web Services provides important pointers about the future of the cloud computing market, how to balance the trade-off between convenience and cost, and where there may be scope for others (such as telcos) to succeed.


Format: PDF filePages: 18 pagesCharts: 10Author: Alexander Harrowell, Matthew JonesPublication Date: April 2015

Table of Contents

  • Executive Summary
  • Amazon opens the books on AWS
  • AWS: A rapidly growing, profitable, $5bn business
  • Why are AWS’ margins so strong?
  • AWS in 2012-2015: Price Cuts and Profits
  • AWS price cuts trail Moore’s Law
  • AWS is not always the cheapest
  • Some AWS users are paying a premium for convenience
  • Convenience through selection: a lesson from Amazon retail
  • Amazon Machine Learning: late to the party
  • Conclusions
  • STL Partners and Telco 2.0: Change the Game

Table of Figures

  • Figure 1: AWS Revenues, Q1 2013-15
  • Figure 2: Combined IaaS + PaaS + Private Cloud + Hybrid Cloud Market Share, 2014
  • Figure 3: AWS vs. Amazon excl. AWS – Operating Margins
  • Figure 4: Amazon’s Platform Model ‘Flywheel’
  • Figure 5: Amazon’s Revenue and Operating Income, 1999-2014
  • Figure 6: AWS’ 42nd Price Reduction since 2006
  • Figure 7: A growing wedge of margin between pricing and Moore’s Law
  • Figure 8: AWS does not always win on pricing for basic computing elements
  • Figure 9: Some of the Desktop Apps now available through AWS Marketplace
  • Figure 10: Amazon Machine Learning can use big data to make predictions

Technologies and industry terms referenced include: