AWS is still the king

Amazon Web Services (AWS) reinforced its position as the continuing leader of the cloud market when it announced the fourth quarter results of 2016. During this time, sales from its cloud business touched a whopping $14 billion, signaling a 47 percent jump in its earnings. Though it was slight lower than expected, as analysts had predicted a revenue of $3.6 billion, it nevertheless is twice the growth of the company as a whole.

To give you a perspective, Amazon’s North American segment posted an earnings of $2.36 billion, which is lower than the earnings from AWS. Also, the operating profit of AWS increased by 25 percent, and this looks huge when compared to the paltry increase of 2.95 percent by the North American segment of its business.

Much of this growth can be attributed to the fact that almost every company in the Silicon Valley, starting from small businesses to giants use cloud in one form or the other, and they all seem to prefer to AWS because of its sprawling infrastructure. Many companies in other fields that are not based in the Silicon Valley are also looking to move their operations to AWS, with Capital One Financial and Workday being the latest to join this bandwagon.

Amazon’s total net income was $2.4 billion, resulting in an earnings of $4.99 per share. The overall revenue for 2016 increased by 27 percent to $136 billion, compared to a total revenue of $107 billion in 2015. The operating income was $1.3 billion during the last quarter of 2016, while it was $1.1 billion during the same time the previous year.

It’s no brainer to understand why its cloud segment had such a stellar performance. Besides the ever-increasing demand for cloud services, AWS introduced more than 1,000 new services and features in 2016, as against 700 in 2015. It also offered seven price cuts in the fourth quarter, and this made AWS cheap and accessible to many small and medium businesses.

In addition to this excellent performance by AWS, the company also showed a positive outlook for the upcoming year. In fact, Amazon as a whole feel confident about achieving higher growth levels in subsequent years. To this end, the company announced that it will create more than 100,000 full-time jobs in the US within the next 18 months, and this will include positions spanning across different education and skill levels. It also hinted that these new jobs will spans across the entire country, and not just within a specific region, thereby signaling that it is eyeing a country-wide expansion.

As for its cloud arm, AWS has announced that many companies like Matson, McDonald’s and the Financial Industry Regulatory Authority (FINRA) have agreed to move tens of thousands of applications to its cloud over the next few years, and this means, more revenue for the company in 2017 and beyond. It also plans to open 11 new centers spread across the US, Canada, India, Korea and the UK.

All this surely points to an amazing year for AWS!

About The Author
Lavanya Rathnam is a professional writer of tech and financial blogs. Creative thinker, out of the boxer, content builder and tenacious researcher who specializes in explaining complex ideas to different audiences.
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