Tom Paine
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Why is
AWS re:Invent 2015, kicking off today in Las Vegas, so significant?
Recently, in comparing Salesforce (NASDAQ: CRM) to Amazon Web Services, a segment of Amazon (NASDAQ: AMZN) I concluded, "well, they're really not the same thing."
And that's true. They hsve different operating platformss, and different ways of delivering services to their customers. And to this point Salesforce has been in the business of delivering packeged solutions, while AWS provides raw computing power with layers of certain managed services on top.
But they are both in the cloud business, and collectively they dominate the cloud in terms of its architecture and economics. And inevitably they are going to collide at some point in the battle for cloud dominance.
This macro comparison might be helpful though its sketchy in some ways. I compared the projections that
Amazon generously offered up in mid-year for calendar year 2015, ending the long speculation over what constituted Amazon's "other" revenue line, to Salasfoce's actual results for its last four quarters through July of this year. Not exactly apples to apples, but I think the big picture comparison is helpful.
| Salesforce | AWS |
| Revenue | $6.0 bn*** | $7.3 bn |
| Revenue Growth | 35% | 81%** |
| Operating Margin | 0% | 21%** |
| Market CAP | $50 bn | $40 to 50 bn* |
*Several fairly consistent estimates, if AWS is valued as standalone; likely conservative at this point.
**AWS results updated based on latest forecasts released at re:Invent; growth & margin data appear based on latest quarter only.
***Salesforce results based on actual 12 months ending 7/31/2015
AWS has the edge in growth and profitability (according to their breakout, though it may not be a straight comparison to Salesforce's numbers) at this time.
And you may see AWS moving closer to offering solutions or the means for solutions in some areas in Las Vegas, such as Business Intelligence, The Internet of Things, and database functionality. And its army of partners are close behind, not as well known as some of Salesforce's partners perhaps, but no less on the cutting edge.
So the thing to watch at AWS' confab is directional. How far will it indicate that its moving up the value chain towards being a solutions provider?
Update 10/8:
AWS' numbers are apparently looking even stronger than previously revealed.
