When people think of Amazon, they think of e-commerce, of books, maybe of music and video streaming. What most people don't realize is the hidden business that drives (and finances) many of Amazon's better-known activities. Amazon Web Services (AWS), the company's cloud infrastructure business for other companies, has quickly grown from a smaller side business to a billion-dollar success and is the main reason for Amazon's profits. In the fourth quarter of 2018, Amazon's cloud division generated revenue of $7.4 billion and contributed nearly 60 percent of the company's operating profit of $3.8 billion.
As our chart shows, Amazon has established itself as the leader in the rapidly growing market for cloud infrastructure services. As more companies make their move into the cloud, demand for cloud infrastructure has risen sharply in recent years, and Amazon was one of the first companies to capitalize on this trend. Research firm Canalys estimates that AWS accounted for 32 percent of global cloud infrastructure spending in 2018, with top competitors Microsoft, Google, Alibaba and IBM sharing 33 percent of the $80 billion market.
When people think of Amazon, they think of e-commerce, of books, maybe of music and video streaming. What most people don't think of is the hidden business that fuels (and finances) many of Amazon's more prominent activities. Amazon Web Services (AWS), the company's cloud infrastructure business catering to other enterprises, has quickly grown from a smaller side business to a billion-dollar success and the main driver of Amazon's profit. In Q4 2018, Amazon's cloud arm generated $7.4 billion in revenue and accounted for nearly 60 percent of the company's $3.8 billion operating profit.
As our chart illustrates, Amazon has established itself as the leader in the rapidly growing market for cloud infrastructure services. As more and more companies make their move to the cloud, demand for cloud infrastructure has risen sharply over the past few years and Amazon was one of the first companies to capitalize on that trend. According to estimates from research company Canalys , AWS captured 32 percent of global cloud infrastructure spending in 2018, with its largest competitors Microsoft, Google, Alibaba and IBM sharing 33 percent of the $80 billion markets.
According to Amazon's CFO Brian Olsavsky, AWS caters to a “very balanced group” of customers, from startups to small businesses, large enterprises, and the public sector. Among them are global players such as Netflix, Samsung, BMW, Spotify, and NASA.
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