Amazon Web Services Becomes Company’s Growth Engine

By Douglas A. McIntyre Updated Jan 13, 11:07AM EST · Published Apr 6, 6:57AM EDT

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Amazon.com retail continues to be the core of its parent company, and management has pressed to make it much larger with its Prime free delivery and streaming media service. The e-commerce part of the Amazon.com Inc. (NASDAQ: AMZN) can grow rapidly for years, as it rips sales from other retailers. However, CEO Jeff Bezos says a much smaller part of Amazon, its Amazon Web Services (AWS), has reached the level of the parent company’s total revenue 10 years ago, and currently its grows at a rate faster than Amazon’s more traditional businesses.

Bezos wrote in a letter to shareholders:

Just over 10 years ago, AWS started in the U.S. with its first major service, a simple storage service. Today, AWS offers more than 70 services for compute, storage, databases, analytics, mobile, Internet of Things, and enterprise applications. We also offer 33 Availability Zones across 12 geographic regions worldwide, with another five regions and 11 Availability Zones in Canada, China, India, the U.S., and the U.K. to be available in the coming year. AWS started with developers and startups, and now is used by more than a million customers from organizations of every size across nearly every industry – companies like Pinterest, Airbnb, GE, Enel, Capital One, Intuit, Johnson & Johnson, Philips, Hess, Adobe, McDonald’s, and Time Inc.

Bezos claims AWS has 1 million customers and that ongoing innovation can make that figure much larger within a short time.
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The battle among the world’s largest tech companies has turned to the cloud, a measure of how important remote storage and related features have become. Amazon has to continue rapid invention in the arena to keep ahead of other aggressive programs, particularly from Alphabet Inc. (NASDAQ: GOOGL), Microsoft Corp. (NASDAQ: MSFT) and International Business Machines Corp. (NYSE: IBM). All these companies can tap existing customers as potential converts to their cloud businesses. However, by most outside measures, Amazon has a large lead in market share. Bezos means to add feature after feature to protect that lead.

The cloud, at least as a major business, has not existed for nearly as long as e-commerce. Bezos means to crush the competition as much with AWS as it did with Amazon.com.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.