América Retail | Homepage
Sunday, June 25, 2017

La primera comunidad del retail en Latinoamérica

USA: Amazon’s cloud is funding its war on Walmart, rival says

USA: Amazon’s cloud is funding its war on Walmart, rival says

Noviembre 15, 2016

👤Periodista: María Alejandra Lopez 🕔15.Nov 2016

 

n case you still think Amazon is still predominantly an ecommerce site, here’s something that’ll change that.

According to Deutsche Bank, Amazon’s cloud business, Amazon Web Services, has become so big that some people think it is subsidizing the company’s retail operations. It wrote in a note Thursday:

“One AWS rival, making the point that the cloud infrastructure business has proven to be far more profitable than everyone thought, argued that the margin story at Amazon has now flipped, such that ‘AWS is now underwriting Amazon’s war on Walmart.'”

In fact, AWS is now the most profitable and fastest-growing business at Amazon.

AWS had $3.2 billion in revenue last quarter, only a fraction of the $29 billion Amazon’s retail business generated in the same period. But it saw far higher margins, with about $1 billion in operating income, compared to Amazon retail’s $360 million.

Read Also: Macy’s holiday campaign propagates our favorite little white lie

On top of that, AWS is still seeing a whopping 55% year-over-year growth rate, which means it still has a lot of room to grow and will likely continue to be a crazy profit-generating machine for a while. In other words, Amazon can keep pumping AWS’s profits into its retail business, a market known for notoriously thin margins and intense competition.

The irony is, AWS began its life as a way for Amazon to make extra money on the huge infrastructure it had built as a way to support its retail operations.

Amazon Tax

This isn’t the first time the investment community talked about this.

Social Capital’s VC investor Chamath Palihapitiya went so far as to say he would bet his entire capital on Amazon if he had to choose one company precisely because of this dynamic.

“The reason I think this has nothing to do with e-commerce, although e-commerce is their way of dog fooding the real reason: AWS,” he said in a Quora Q&A session earlier this year.

Palihapitiya even compared AWS to a “tax”because it’s so widely used by every company that it’ll eventually turn into a fixed annual cost for most businesses. He said:ç

Read AlsoKmart goes all in on mobile for the best holiday deals

“AWS is a tax on the compute economy. So whether you care about mobile apps, consumer apps, IoT, SaaS etc etc, more companies than not will be using AWS versus building their own infrastructure. If you believe that over time the software industry is a multi, deca-trillion industry, then ask yourself how valuable a company would be who taxes the majority of that industry.”

To understand just how big AWS is compared to its competitors, this chart by Synergy Research Group should give a clue. In its latest quarterly analysis, the market research firm said AWS accounted for 45% of the revenue generated by public “infrastructure as a service” (IaaS) providers, bigger than the next three players combined, which are Microsoft, Google and IBM.

Source: Business Insider

Articulos relacionados

USA: Neiman Marcus embracing innovative tech

USA: Neiman Marcus embracing innovative tech

Junio 23, 2017

  Luxury retailer Neiman Marcus is all about digital technology and embracing more than a few

USA: Walmart is telling vendors to stop using Amazon’s cloud

USA: Walmart is telling vendors to stop using Amazon’s cloud

Junio 23, 2017

  Walmart has issued a warning to tech companies it does business with: don't use Amazon's cloud services. Amazon

USA: Best Bath and Beyond plunges after missing across the board

USA: Best Bath and Beyond plunges after missing across the board

Junio 23, 2017

  Bed Bath & Beyond is falling after missing earnings. Shares are down 11.38% in aftermarket trading

USA: Parent of Burger King, Tim Hortons to curb antibiotics in chicken

USA: Parent of Burger King, Tim Hortons to curb antibiotics in chicken

Junio 23, 2017

  The parent of Burger King and Tim Hortons on Thursday vowed to cut the use

USA: Los resultados acompañan a Costco

USA: Los resultados acompañan a Costco

Junio 23, 2017

  El retailer estadounidense Costco Wholesale ha facturado 84.815 millones de dólares (75.754 millones de euros)

Últimas Noticias

Newsletter

SECTIONS

América Retail