Amazon Finally Discloses Cloud Services Sales, Showing 49% Jump

AMAZON
A truck drives by Amazon.com's Fulfillment Center in Fernley, Nevada on December 15, 2004. Photographer: Ken James/ Bloomberg News.

Turns out there’s real money in the cloud. The Amazon.com Inc. division that serves up computer power, storage, and software via the Internet, generated $1.57 billion in first-quarter sales.

The first-ever disclosure of results from the Amazon Web Services division showed revenue increased 49 percent from a year earlier. AWS cranked out operating income of $265 million for Amazon, helping offset losses in other businesses. Net losses for the enlarged company came in at $57 million.

Amazon’s reluctance to break out results from AWS spurred years of speculation as to the true size of its cloud. The numbers suggest Amazon is ahead of rivals Google Inc. and Microsoft Corp., which are estimated to generate lower revenue in comparable businesses. A recent note by Karl Keirstead, an analyst at Deutsche Bank AG, pegged AWS sales at 10 times those of Microsoft’s cloud services.

“Amazon Web Services is a $5 billion business and still growing fast -- in fact it’s accelerating,” Amazon Chief Executive Officer Jeff Bezos said today in a statement.

Amazon introduced its cloud services in 2006 with two services -- rentable storage and computers. These have since become common building blocks of Internet-based computing systems, supporting companies ranging from large enterprises like Infor US Inc. and Netflix Inc. to startups such as Instacart Inc.

Since its inception, Amazon has refined and expanded AWS while competitors including Microsoft and Google have tried to replicate its success with similar projects. Those companies have only recently started to deliver basic services on par with Amazon’s.

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