Amazon Web Services revenue rises 81% year over year • Hacker News Board

Re: Amazon Web Services revenue rises 81% year over year

#121

Post by alaxsxaq » Fri, Jul 24, 2015, 12:57 PM UTC

syllogism wrote: post #36

afarrell wrote: post #9

I wonder how much of that is people forgetting to shut down unused EC2 instances

It really feels like they design the thing to make that happen. I got stung for over $100 just as a casual user, because I never guessed that I had to click through all the (slow loading) regions to see the instances and volumes and snapshots I might have burning money. The web interface is a total clusterfuck.

Billing alerts and learning to use the CLI largely remove the issue of ghost resource usage. If you use AWS beyond the basics, it is worth investing the time to get the CLI setup and use it in favor of the web interface.

Re: Amazon Web Services revenue rises 81% year over year

#122

Post by Spooky23 » Fri, Jul 24, 2015, 1:13 PM UTC

bmir-alum-007 wrote: post #93

bbrazil wrote: post #92

Earlier quoted context omitted.

> it's not a panacea because it tends to get very expensive, very quickly. I've investigated colocs near some AWS locations and found AWS to be around 20% cheaper than the cheapest viable option. With AWS's occasional price drops on top of that and general flexibility it's not a difficult choice. One thing I found was that most providers were trying to sell vertical reliability (e.g. hardware RAID1), with a matching…

Is that rented gear in someone else's racks or your own gear in racks you rent? Beyond a few boxes, the TCO of buying your own gear is far, far cheaper (look at the prices of Supermicro boxes, not luxury, overpriced enterprise boxes that aren't use-case appropriate). Someone also has to know how to negotiate with DC's (because power circuits are often the biggest cost factor) and how to separately get good deals on f…

You'll always be able to engineer a better system for a particular known purpose.

The magic of AWS is that the transactional nature of it gives you more flexibility. I was working with somebody with about a storage requirement that will be in the 800-900TB range. But to hit the price point they want, they'd be buying a 1PB capacity solution.

The catch is, what's next? If they exceed their growth projection (a strong possibility), they need to spend $$$ in capital funds to buy some large block of capacity. That procurement takes time. Implementation requires more planning.

With Amazon, the prices are high/competitive, but the marginal cost of a unit of capacity is the cost of that capacity!

On the other hand, this user also has a large transaction system with well known performance an scaling characteristics. In their case, their buying power and size makes it much cheaper (by 3x) to host in a datacenter with customer-owned equipment.

Re: Amazon Web Services revenue rises 81% year over year

#123

Post by mdasen » Fri, Jul 24, 2015, 1:27 PM UTC

cft wrote: post #84

fnayr wrote: post #5

36% of Amazon's operating profit is now from AWS. That's crazy!

Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…

If the point of a business is compensating its employees, that might be a strategy. However, that isn't the point of the business. The point of the business is to generate money for the shareholders. Over the short/medium term, shareholders might be content with growth and revenue. Over the long term, without profits the business has nothing for shareholders.

It really isn't a tax strategy any more than being unemployed with no income is a tax strategy. Amazon's strategy seems to be keeping margins low enough that it's hard for others to compete with them, in the hopes of great long-term profits.

While the stock may be valued on its revenue, that valuation is premised on the idea that Amazon will be making a lot of profits from that high revenue in the future. Investors aren't buying Amazon stock believing that it's avoiding profit as a tax strategy to funnel money to employees. They're buying Amazon stock believing that it's the future of retail and that being the future of retail will come with enormous profits.

Re: Amazon Web Services revenue rises 81% year over year

#124

Post by zeckalpha » Fri, Jul 24, 2015, 1:27 PM UTC

tajen wrote: post #116

jnky wrote: post #111

Earlier quoted context omitted.

Maybe taxes on profits were created so that companies invest their profit instead of hoarding it or giving it to shareholders, creating jobs and infrastructure in the process. As far as I'm concerned, Amazon is using its profits (or lack thereof) exactly as intended.

I don't think someone has designed taxes around incentives. In most countries wages are more heavily taxed than products, which balances the spending towards buying more things rather than employing more people. It seems very stretched, but some ecologists suggest to tax petrol more heavily and tax wages less, so it would be easier to employ more people for a task than throw more petrol at it (I use petrol in terms o…

What about tariffs? They're designed to incentivize buying products made at home. What about "sin" taxes? They're designed to incentivize good behavior?

(Some) taxes are definitely designed around incentives.

Re: Amazon Web Services revenue rises 81% year over year

#125

Post by eloff » Fri, Jul 24, 2015, 1:34 PM UTC

sudhirj wrote: post #106

cft wrote: post #84

Earlier quoted context omitted.

Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…

Isn't this pretty much the best strategy anywhere in the world? Is there any country that taxes by revenue? Apple has this weird problem of being so profitable that they have no clue what to do with all that money. And then everyone picks on them for their loophole-based tax mitigation strategies.

There are countries with much lower corporate tax rates. E.g. Ireland is 15%, Panama is 0% (on foreign income).

I'd say the optimal strategy is what Facebook and Google do with the double Irish Dutch sandwich http://conversableeconomist.blogspot.com/2014/07/double-iris...

Re: Amazon Web Services revenue rises 81% year over year

#126

Post by [deleted] » Fri, Jul 24, 2015, 1:34 PM UTC

mdasen wrote: post #123

cft wrote: post #84

Earlier quoted context omitted.

Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…

If the point of a business is compensating its employees, that might be a strategy. However, that isn't the point of the business. The point of the business is to generate money for the shareholders. Over the short/medium term, shareholders might be content with growth and revenue. Over the long term, without profits the business has nothing for shareholders. It really isn't a tax strategy any more than being unemplo…

[deleted]

Re: Amazon Web Services revenue rises 81% year over year

#127

Post by Spooky23 » Fri, Jul 24, 2015, 1:35 PM UTC

sudhirj wrote: post #106

cft wrote: post #84

Earlier quoted context omitted.

Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…

Isn't this pretty much the best strategy anywhere in the world? Is there any country that taxes by revenue? Apple has this weird problem of being so profitable that they have no clue what to do with all that money. And then everyone picks on them for their loophole-based tax mitigation strategies.

The US has a system engineered around the political process. High corporate tax rates, with lots of carve-outs.

There are all sorts of strategies for optimization. Many involve lobbying Congress for special carve-outs.

Re: Amazon Web Services revenue rises 81% year over year

#128

Post by Aqueous » Fri, Jul 24, 2015, 1:43 PM UTC

cft wrote: post #84

fnayr wrote: post #5

36% of Amazon's operating profit is now from AWS. That's crazy!

Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…

Issuing stock is not the principle way they maintain positive cash flow. The float between the time their customers pay them and the time they have promised to pay their vendors creates enormous, ever-increasing operating cash flow:

https://hbr.org/2014/10/at-amazon-its-all-about-cash-flow/

They are essentially borrowing from their own customers (or maybe more accurately, vendors), at zero interest, to continually build the business.

Re: Amazon Web Services revenue rises 81% year over year

#129

Post by henpa » Fri, Jul 24, 2015, 1:54 PM UTC

JosephRedfern wrote: post #103

syllogism wrote: post #36

Earlier quoted context omitted.

It really feels like they design the thing to make that happen. I got stung for over $100 just as a casual user, because I never guessed that I had to click through all the (slow loading) regions to see the instances and volumes and snapshots I might have burning money. The web interface is a total clusterfuck.

Whenever I've had a similar issue, I've emailed to explain and been given a full refund.

Me too. Happened 2 times to me already. ;-)

Re: Amazon Web Services revenue rises 81% year over year

#130

Post by ethbro » Fri, Jul 24, 2015, 2:01 PM UTC

Aqueous wrote: post #128

cft wrote: post #84

Earlier quoted context omitted.

Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…

Issuing stock is not the principle way they maintain positive cash flow. The float between the time their customers pay them and the time they have promised to pay their vendors creates enormous, ever-increasing operating cash flow: https://hbr.org/2014/10/at-amazon-its-all-about-cash-flow/ They are essentially borrowing from their own customers (or maybe more accurately, vendors), at zero interest, to continually bu…

Incidentally, this is pretty much how Warren Buffett made his first billions with Berkshire to the best of my understanding.

He realized that insurance generated enormous carry, and if you were able to better utilize that (say, by buying other companies and improving them) then you had a pretty winning strategy.