Amazon Web Services: Staggering numbers: dominant now, but nothing lasts forever (I think)

Tom Paine

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Amazon gave everyone an idea of whst Amazon Web Services'(AWS') numbers might look like for 2015 earlier in the year, but some revised estimates AWS Chief Andy Jassy showed the day before yesterday at AWS re:Invent were stunning.

Andy Jassy / Courtesy Amazon

Revenue for 2015 is now forecasted to be $7.3 billion. AWS now has more than 1 million active customers, and database revenue alone now accounts for more than a $1 billion annual run rate. AWS reported year-over-year revenue growth of 81% and operating margins of 21%, but I believe these were for quarterly results only.

It seems that in less than 10 years of existence as an active business, AWS has fsr surpassed the expectations of the classic disruptor in Clayton Christiansen's "innovative disruptor" model. These are enterprises which typically enter the market with a low cost/low quality (on some attributes) offering and gradually move upmarket to the point where they can attack the core posiions of the market leaders.
(This week I published a comparison of AWS and Salesforce.)

Not quite so fast? Well, I don't now how Amazon did its accounting to arrive at some of these conclusions, but its probably true that the profits margins in particlar reflect a considerable amount of cost sharing / cost savings with the core Amazon business. And its not clear to me for how long the unique advantages of having a dominant position in the market for public cloud computing will last.

Everyone with an understanding of computer industry history knows what happened to the previous 'Age of Timesharing"; it died, due to the minicomputer, cheaper peripherals and companies' desire to have more control over their computing environments. I"m not sure for how long we are locked into the "age of public cloud computing."