Amazon Web Services accelerates its growth
Division’s second-ever report shows cloud computing generated $1.8B in sales
The Amazon.com Inc. division that serves computer power, storage and software via the Internet, accelerated the pace of its growth, generating $1.82 billion (U.S.) in second-quarter sales.
The second-ever disclosure of results from the Amazon Web Services group showed sales increased 81 per cent from a year earlier, greater than a 49-per-cent rise in the first quarter. AWS produced $391 million of operating income for Amazon, supporting the company’s $92 million of total operating income.
Amazon’s almost decade-old cloud division has propelled the company into the enterprise technology market and broadened its competitors from retail to major IT firms such as Oracle Corp., Google Inc. and Microsoft Corp.
The sharper pace of growth in the cloud unit compared with its traditional e-commerce business have led some analysts to call for Amazon to split off the division.
“If all of their profit is from the cloud, the cloud business isn’t dependent on the retail business,” said Sucharita Mulpuru, an analyst at Forrester Research Inc.
“If there’s ever a lull in the stock, an activist can push for a split. That’s something to watch for.”
Amazon’s cloud division ran with an operating margin of 21.4 per cent. By comparison, Rackspace Hosting Inc. made sales of $1.85 billion in its most recent financial year with a margin of 6.1 per cent.
Total revenue increased 20 per cent to $23.2 billion in the quarter, the Seattle-based company said Thursday in a statement.
Shares jumped as much as 19 per cent in extended trading to $573.45.
Amazon introduced its cloud unit in 2006 with two services — rentable storage and computers — that have become the building blocks of Internet-based systems, supporting companies ranging from Pfizer Inc. and Netflix Inc. to startups such as Airbnb Inc. and Pinterest Inc.
Since its inception, Amazon has refined and expanded AWS while com- petitors have tried to replicate its success.
Rivals such as Microsoft and Google have only recently started to deliver basic services on par with Amazon’s.
The cloud-computing effort also has disrupted traditional technology companies as customers buy less hardware and software, instead renting computers from Amazon.
Like other large-scale operators, the company buys large amounts of its cloud hardware from Asian-based component manufacturers rather than traditional vendors.