Amazon announced impressive financials for the quarter ending March 31, 2016, fueled largely by growth in its cloud business, Amazon Web Services. Amazon revenue rose 28.2% to $29.13 billion while AWS revenue rose 64% to $2.56 billion, in comparison with the first quarter of 2015 in both cases. Operating income from AWS amounted to $604M whereas Amazon, as a whole, reported $1.1 billion in operating income. In other words, operating income from AWS represents roughly 55% of the company’s operating income as a whole, even though its revenue accounts for only 9% of the company’s total revenues for the quarter. The release of Amazon’s Q1 2016 financials underscores the importance of AWS to Amazon at large while Amazon, as a whole, now marks four consecutive quarters in the black as it achieves profitability as a result of the growing maturation and diversification of its online retail business. This week’s financials represent a huge coup for AWS and impressively underscore its ability to grow and remain profitable despite intensifying competition from Microsoft Azure and the Google Cloud Platform.
The AWS Database Migration Service, which allows customers to migrate databases to the AWS platform, is now generally available. The service can be used for Oracle, SQL Server, PostgreSQL, Amazon Aurora, MySQL and MariaDB databases. Amazon’s Database Migration Service supports migrations between the same database platform as well as from one database platform to another (Aurora to MySQL, for example). Moreover, customers can use the AWS Database Migration Service to migrate databases from on-premise infrastructures to Amazon RDS or EC2, EC2 to RDS, RDS to EC2 and RDS to RDS. The Amazon Database Migration Service creates a replication instance and then transports data from the source database to the target destination. The service manages the conversion of data from one database format to another and provides alerts and notifications regarding the progress of the migration and additionally provisions a replacement instance as required. Announced last fall at AWS re:Invent, the AWS Database Migration Service has facilitated the migration of over 1,000 databases to date and marks yet another feather in Amazon’s cap, particularly given that customers can perform database migrations with a few clicks of the mouse from the AWS management console.
Amazon Web Services has acquired NICE, a company headquartered in Asti, Italy that provides software for high performance computing. NICE’s products enable customers to optimize their high performance computing workloads. NICE’s EnginFrame product delivers a grid portal for accessing and utilizing grid services and resources. Meanwhile, NICE’s Desktop Cloud Visualization “enables Technical Computing users to remote access 2D/3D interactive applications over a standard network.” The acquisition of NICE points to an interest on the part of Amazon Web Services in deepening its high performance computing product and service offerings. AWS Chief Evangelist Jeff Barr noted in a blog post that NICE will retain its branding for EnginFrame and Desktop Cloud Visualization products. The acquisition is expected to be finalized by Q1 of 2016.
After seven years, Netflix reports that it has finally completed its migration to Amazon Web Services. In other words, every non-AWS data center that was previously used by the company has been shut down as of January 2016 and migrated to the Amazon cloud. In a blog post by Yury Izrailevsky, Stevan Vlaovic and Ruslan Meshenberg, Netflix reports that transitioning to the cloud has brought with it a multitude of benefits such as the ability to accommodate explosive growth, cost savings that “ended up being a fraction of those in the data center,” enhanced service availability that enabled it to reach its goal of four nines of service uptime and greater operational agility. Migrating to the cloud, for example, has enabled Netflix to add “thousands of virtual servers and petabytes of storage within minutes” while accommodating growth in monthly streamlining hours in excess of a factor of 1000 between 2007 and 2015 and an eightfold rise in its population of members. The consummation of the migration of Netflix to Amazon represents a true milestone in the evolution of cloud computing given that the largest streaming video service in the world has chosen to partner with one public cloud vendor for all of its cloud computing needs. That Netflix chose Amazon represents a stunning affirmation of Amazon’s ability to scale and the richness of its features. The question now is whether Netflix will complement its partnership with Amazon with another major cloud vendor to reduce the vendor dependency risk associated with hosting its services on one vendor while concurrently recognizing the ascendancy of other players in the public cloud space.
On Thursday, Amazon.com announced that Amazon Web Services generated $2.4B in revenue during Q4 of 2015, or year over year revenue growth of 69%. The Q4 year over year growth rate declined from Q3 and Q2 of 2015, which recorded year over year growth rates of 78% and 82% respectively. Nevertheless, Amazon Web Services brought in a whopping $7.88B for the entirety of 2015, meaning that it is now fundamentally an $8B business. Operating income for Q4 was $687M and approximately $1.9B for the entire year. The $687M in operating income for Q4 2015 constitutes an increase in comparison to $521M in Q3 and $240M for Q4 of 2014. Amazon’s announcement of $2.4B in quarterly revenue represents the highest quarterly revenue figure for Amazon Web Services in its history, exceeding the $2.08B recorded in Q3 of 2014. Despite impressive financials for Amazon Web Services, shares of Amazon tumbled on Thursday after news that it had missed its earnings estimates and continues to operate on razor thin margins. Regardless, Amazon Web Services remains the fastest growing business unit within Amazon.com.
Amazon offered a stunning Black Friday promotion for its Amazon Cloud Drive that gives users a year of unlimited cloud storage for $5. The promotional price of $5 represents a 92% discount on the regular price of $59.99/year and illustrates the intensity of Amazon’s interest in grabbing a space within the cloud storage space amongst the likes of Dropbox Pro, Apple’s iCloud, Microsoft OneDrive and Google Drive. Amazon’s pricing trumps Microsoft, which had offered Office 365 subscribers unlimited storage on its Microsoft OneDrive platform until an internal investigation revealed a subset of users were using storage in excess of 75 TB per user, causing Microsoft to subsequently curtail storage for Office 365 subscribers to 1 TB per user. Bear in mind that Amazon’s promotional price of $5 is almost certain to increase in subsequent years, upon renewal. Nevertheless, the plan allows uploads of an unlimited number of files, including full resolution photos. More importantly, from Amazon’s standpoint, the Cloud Drive promotion continues the consumerization of Amazon’s cloud platform by luring more and more users to its platform, thereby creating the potential for consumer spillage to other Amazon products and services. Rest assured that competition in the cloud storage price is likely to only continue to intensify as Box and Dropbox go head to head with cloud behemoths such as Amazon and Microsoft. Regardless, the real winners are consumers who stand to benefit not only from downward trajectories in price, but also from enhanced functionality for file uploads, storage and retrieval that will likely accompany increased competition within the cloud storage space.