AWS took the lion's share of Amazon's total profits
Amazon Web Services accounted for the majority of its parent company's total operating income in the fourth quarter. These hit $1.35bn, 46 per cent higher than the corresponding quarter last year and representing 63 per cent of Amazon's total profits at €2.16bn in Q4.
Meanwhile, AWS' net sales reached €5.11bn over the three months, 45 per cent higher than last year, meaning the service has a revenue run rate of more than €20bn for the first time.
"[AWS has had] strong usage growth. Usage growth continues to be strong, growing at a higher rate than our revenue growth rate, and customers continued to add workloads and expand. We're adding new services and features all the time, over 1,400 in 2017 alone," said CFO Brian Olsavsky on an earnings call transcribed by Seeking Alpha.
But Microsoft Azure is growing faster
Although Amazon will have much to celebrate for hitting 45 per cent revenue growth through AWS, Microsoft's Azure platform is growing even faster. Q2 Azure revenues grew 98 per cent, according to the firm, with the previous quarter logging 90 per cent growth.
Kate Hanaghan, chief research officer at TechMarketView said the competition between AWS and rivals Microsoft and Google will become more fierce as Amazon extends into new arenas such as AI and IoT.
"The market is of course expanding at very healthy rates, but we also believe Microsoft is clawing back some of the ground it lost to AWS in the early days of public cloud market development," she said.
"Furthermore, this is a battle that will only intensify further - and in a way that could take the industry and market into as yet unknown directions. As AWS offerings get deeper into AI, machine learning and IoT, direct competition with Google will become more apparent and end-user organisations will increasingly swap between AWS and Azure as they see fit."
More geographic expansion is in the pipeline
AWS has plans to open new datacentre facilities in Sweden in 2018, after cutting the ribbon on locations in France in December last year.
According to Olsavsky, AWS has more expansion in the works, both in terms of increasing its geographic coverage and giving a boost to its sales and technical teams.
"AWS infrastructure and the growth in technical and sales teams… will continue," he said.
"We're very happy with both the progression in new services and features that we've been able to bring to customers and also their response with continued geographic expansion and continuing to again build on our tech teams and our sales teams. That expense is going to continue and likely increase."
AWS could get cheaper
One analyst asked whether price reductions for cloud services will likely continue, pointing to the fact that pricing has become "more subtile" over the last few quarters.
In response, Olsavsky said that AWS has undergone around 60 price reductions since its launch, which could continue in the future.
"Periodic price reductions are a normal part of our business; we've reduced prices more than 60 times with AWS since launching. So really, our philosophy here is to drive efficiencies in our operations and pass those savings on to customers. Some of that is through the more than 60 price reductions, but also finding new services and future launches, and better options for customers to present more efficient features for them to be able to run their businesses," he said.
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