Though sales of Amazon Web Services (AWS) grew 69% and profits tripled, the stock of parent company Amazon.com fell by 10% in pre-market trading after its latest earning report, but it had jumped by 8% during Thursday trading.
The fall in market valuation of Amazon.com, described on Wall Street as a readjustment of ‘outsize expectations’ following Amazon’s previous declarations about cost management and investment in infrastructure, is unlikely to affect the cloud services business however.
Meanwhile, the AWS unit saw its quarterly operating profit triple to $687 million, after sales revenue for its latest quarter rose 69% to $2.4 billion. This represents a decline in growth rate, which was 78% in the previous three months. AWS brought in $687 million in operating income for the quarter, in comparison to the $240 million revenue that was made in the corresponding quarter last year. The operating expenditures for AWS for the quarter came in at $1.78 billion, up from $1.18 billion a year earlier.
Though the rate of expansion may be slowing, AWS is still the fastest growing division within Amazon and in an unassailable lead in the cloud infrastructure market, according to Richard Brown, Senior VP for EMEA at Interactive Intelligence.
“Amazon’s latest financial results show that demand for cloud computing is booming and provides insight into the changing behaviours of organisations as they move to the cloud. To keep their foothold in this growing market, cloud vendors like Amazon, Google and Microsoft are prioritising work on their cloud platforms.”
Direct comparisons with AWS rivals such as Microsoft Azure, Google Cloud Platform and IBM SoftLayer are difficult as their parent companies’ financials are structured differently.
On January 18th BCN reported how increasing price competition among the top three cloud service providers may affect profitability in the cloud market in coming months.
This year, BCN reports, AWS plans to add 5 AWS regions and 11 Availability Zones to its current estate of 32 Availability Zones across 12 geographic regions worldwide, with new sites in London, China and India.