AWS Engine Pulls the Amazon Train in Q2

Mitch Wagner
7/27/2017

Amazon Web Service is the fastest-growing part of Amazon's business with sales climbing 42% year-over-year, signifying the cloud is increasing in importance for the company as its overall net income slowed in the second quarter.

Growth in North America was the second biggest sales driver behind AWS, at 28%, with traditional and consolidated sales growing more slowly. However, North America still accounted for more than half of AWS's net sales, or 58%, while AWS accounted for just 10% of Amazon's overall sales.

And AWS is actually growing slower than it was a year ago, when it saw 58% year-over-year growth.

AWS net sales were $4.1 billion, up from $2.9 billion in the year-ago quarter. Operating expenses for AWS were $3.2 billion, compared with $2.2 billion in the year-ago quarter, with operating income of $916 million, up from $718 million a year ago.

Amazon has been growing engineering and sales for both its AWS cloud business and advertising, which increased cost. Amazon has also seen a 71% increase in assets acquired under capital leases, mostly for the AWS business.


Keep up with the latest enterprise cloud news and insights. Sign up for the weekly Enterprise Cloud News newsletter.


The decline in Amazon's profitability ended CEO Jeff Bezos's brief run as the wealthiest person in the world. For several hours, Bezos grabbed that position from Bill Gates, but the decline in Amazon's fortunes means Gates rose to the top again.

AWS is the far-and-away leader in public cloud market share. Although Microsoft, Google, IBM, Alibaba and Oracle all grew much faster than Amazon in the first quarter, AWS still controls 33% of the public cloud market, bigger than all those other players combined, according to a report from Synergy Research Group. (See AWS Public Cloud Dominance Continues – Report.)

Amazon announced in June that it plans to buy Whole Foods for $13.7 billion, incidentally stealing away a marquee customer from AWS rival Microsoft. (See Amazon Steals Big Microsoft Customer With Whole Foods Purchase.)

Overall, Amazon reported second-quarter sales of $38 billion on Thursday, up 25% year-over-year. However, net income was down significantly -- $197 million, or $0.40 per diluted share, compared with the year-ago quarter net income of $857 million, or $1.78 per share. Amazon attributed the decline to increased internal investments in infrastructure and hiring.

Amazon's earnings missed estimates, as analysts surveyed by Bloomberg expected $1.42 per share on revenue of $37.2 billion. Amazon traded at $1,014 after hours, down 3.06%.

Related posts:

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News

(14)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
kq4ym
kq4ym
8/14/2017 | 6:10:04 PM
Re: Part of the evolution
I have three Kindles but only use regularly my latest which is the bargain $49 model. I still hang on to the other two and use one for reading and the other for music playing with it's better stereo speakers. But Amazon surely is making some good pocket change with the cloud as noted "with sales climbing 42% year-over-year," they can't complain, even if Bezos is now #2 wealthiest.
Michelle
Michelle
8/5/2017 | 2:13:06 PM
Re: Part of the evolution
@Maryam I've wondered what happens to older Kindles. Do you end up recycling or giving away to family members? 
maryam@impact
[email protected]
8/2/2017 | 11:36:51 PM
Re: Part of the evolution
Their new echo show is already a big departure from the original echo. I think the next iteration will be even more robust.I usually plan on replacing my Kindle every two years because the upgrades are significant enough to make it worth my cost outlay.
Michelle
Michelle
7/31/2017 | 8:05:00 PM
Re: Part of the evolution
@maryam that's a very interesting perspective!! I hadn't thought of the potential evolution of Alexa (as with the Kindle). User experience matters and changes over time as companies learn what works best.
maryam@impact
[email protected]
7/31/2017 | 8:01:19 PM
Re: Part of the evolution
Michelle I owned the first gen Kindle is a completely different experience now.I expect Alexa will be leaps and bounds better in the next 23 years. Right now though it gets the job done nicely they are adding new skills and it's working quite well.
Michelle
Michelle
7/31/2017 | 7:27:52 PM
Re: Part of the evolution
Do you think Alexa is a good longterm gadget for Amazon? Does it have "legs" like the Kindle?
JohnMason
JohnMason
7/31/2017 | 4:43:06 PM
Re: Part of the evolution
Alexa is a good example of cloud-power, although I have been getting better results from "Ok Google," at least for my applications (I use "Ok Google" to look up terms and concepts I am not familiar with, and it is very quick and accurate so far).
maryam@impact
[email protected]
7/31/2017 | 3:27:58 PM
Re: Part of the evolution
I am not even a baseball fan but I love my tech toys like Alexa!
JohnMason
JohnMason
7/31/2017 | 3:04:24 PM
Re: Part of the evolution
@maryam: I see the AWS logo when I watch the Cubs on TV, with a beer in my hands. How could I not like them after that?
maryam@impact
[email protected]
7/31/2017 | 2:46:43 PM
Re: Part of the evolution
Mitch absolutely sometimes repositioning puts the company in a better place for long term success. It's those that hold on until the bitter end and don't retool and reinvest that tend to die.
Page 1 / 2   >   >>
More Blogs from Wagner’s Ring
We're packing our bags for Dallas, for our cleverly named Network Virtualization and SDN Americas conference, but first we sat down to talk about NV, SDN and our favorite travel snack.
Will Apple's new iPhone 11 grow telco profits? Will Apple TV+ compete in a crowded OTT market? And why does everybody have fabulous hair in an Apple TV+ series where civilization has collapsed because everybody in the world is blind?
After years of defending itself against US spying accusations, Huawei claims the US government is spying on it.
The satellite network operator is looking to the Open Networking Automaton Platform (ONAP) to automate connecting its space-based network with terrestrial operators.
VMware's been shopping this summer, buying three cloud and networking startups that will bolster its telco strategy.
Featured Video
Upcoming Live Events
October 1-2, 2019, New Orleans, Louisiana
October 10, 2019, New York, New York
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3, 2019, New York, New York
December 3-5, 2019, Vienna, Austria
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events
Partner Perspectives - content from our sponsors
Why Are Governments Around the World Subsidizing 5G?
By Paul Zhou, FromGeek.com, for Huawei
Edge Computing, the Next Great IT Revolution
By Rajesh Gadiyar, Vice President & CTO, Network & Custom Logic Group, Intel Corp
Innovations in Home Media Terminals for the Upcoming 5G Era
By Tang Wei, Vice President, ZTE Corporation
All Partner Perspectives