Amazon does not disclose margins for individual AWS services, although the AWS operating margin was around 31% in the first quarter. The EC2 service might have a gross margin percentage in the mid-50s, Suri said.
2 cloud money driver#
Core computing: EC2ĮC2 is one of the oldest AWS services and it still stands out as the major driver of gross profit and operating profit, said Bhavan Suri, co-head of technology equity research at William Blair, which has the equivalent of a buy rating on Amazon stock. Larger customers can access more meaningful discounts.īernstein's analysts estimated that in 2019 AWS had a 61% gross margin overall.Īmazon declined to comment for this article.
2 cloud money software#
If 20% of AWS customers deliver 80% of revenue, then the widest margins are coming from the small and medium-sized customers in the remaining 80%, said Joe Kinsella, founder and former technology chief of CloudHealth, a start-up VMware acquired in 2018 whose software helps companies tune their cloud usage. Revenue and profit are probably not evenly distributed among the millions of AWS customers. In the first half of 2020, the analysts estimated that the platform percentage had risen to 18%. In May, for example, Selipsky tweeted about a new service called App Runner that deploys applications in virtual containers, saying that it could help clients "focus on building their businesses, not managing #containers & #infrastructure."Īnalysts at Bernstein in June estimated that in 2015, 14% of AWS revenue came from higher-margin "platform as a service" products, while the rest coming from lower-level "infrastructure as a service" products. Nowadays, however, Amazon increasingly emphasizes more complicated, higher-level capabilities, which offer higher margins and can make it harder for customers to switch to other providers.
Add in the Elastic Block Store and Simple Storage Service data-storage services, the Relational Database Service for storing and serving up data, and data-transfer fees, and that brings the total above 70% of revenue, Quinn said.
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