There is no doubt that with its number of web services, Amazon has changed the computing world and raised the cloud computing industry to a great extent. Amazon believes on billable service and it has changed the viewpoint of businesspersons by providing them affordable storage and computing resources. With these excellent web services, many people want to know about Amazon’s revenue. I would like to share what I have got from various sources.
In a report, made public by UBS Investment Research analysts Brian Pitz and Brian Fitzgerald about Amazon’s Web Services (AWS), they pointed out that AWS would earn $500 million revenue in 2010 which would grow to $750 million in the next year. While the figure for 2014 is gigantic; AWS would increase its revenue to $2.54 billion.
According to the report, the services offered by AWS will increase its market share from $5 to $6 billion till the end of this year and it would reach to $15 to $20 billion in the next four years. The question is how UBS analysts came to this conclusion.
Well, it is evident from IDC report in which they described about the global cloud market which currently stands at $22 billion and would grow to $55 billion in 2014. Moreover, they gave increasing figures of server and storage accounts which would reach to $20 billion in 2015.
“Of the twelve AWS product lines, only two (EC2 and S3) compete in this subcategory. AWS essentially ‘rents out’ IT infrastructure to companies that seek to outsource IT needs such as Application Hosting, Web Hosting, High Performance Computing, Storage, E-Commerce, and more. Amazon was one of the first entrants (3Q06), and is a top player in the rapidly growing market.” (UBS Research Report)
The report tells that AWS though earning very small on shares but in 2011, it would increase the value of its shares to more than 100%. According to UBS analysts, the overall revenues of Amazon are around $25 billion while worth of AWS business is between $3.4 billion to $3.8 billion. Their estimates go further in deep to aware us about net income of AWS business which is currently at $58.2 million and will grow to $100.7 million in the next year. The analysts tell that by the end of 2014, this number will grow to $393 million and the share price would increase from 10 cents to 83 cents. Moreover, the gross margin of AWS will be approximately 50% as compared to gross margin of Amazon which will hover around 22% to 23%.
These are extremely surprising figures and if they are correct, we would say that Amazon was wise enough to bet on the cloud computing prospect. However, I know this fact very well that Amazon has not publically announced its revenues alongside its different products.