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AWS’s Share of Amazon’s Profit

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Re: AWS’s Share of Amazon’s Profit

#121

Post by scarface74 »

rexreed wrote: post #69

He's overly simplifying the contribution to profit by not understanding the contribution to expenses. It's not his fault because Amazon doesn't break it out that way. They don't allocate certain expenses to AWS and other expenses to other branches. While there's no doubt that AWS is very profitable, to say it contributes a certain percentage to overall profits probably misses the mark tremendously. It's probably and…

Every large corporation has the concept of “Organizational Finance” and cost accounting where they charge internal departments and treat them like customers. Also, not all of Amazon retail’s infrastructure is hosted on AWS.

As an aside, I was listening to an interview by someone at GCP and they said that almost none of Google’s infrastructure is part of GCP besides some internal software.

Re: AWS’s Share of Amazon’s Profit

#122

Post by scarface74 »

mbesto wrote: post #38

Profit can be a really weird number, especially when it comes to data centers. So looking at pure earning statements numbers is likely going to be misleading no matter how you try to look at (unless you actually look at bank statements, you can create as many interpretations as you want). First, data centers require A LOT of upfront capital. This capital is then capitalized over years, which is how it ultimately affe…

There is no need to put profits in scare quotes. There are GAAP standards for publishing profits and anyone with an accounting background understands what profits mean.

Re: AWS’s Share of Amazon’s Profit

#123

Post by scarface74 »

jkingsbery wrote: post #120
biggestdecision wrote: post #93

Earlier quoted context omitted.

But also, what synergy do the tech giant and retail giant parts of Amazon have? If the two parts of the business don't really gel, what's the benefit of keeping them together in one company?

(I'm an engineer at Amazon, but I don't speak on behalf of the company, I'm just sharing my experience) Here are a few different ways that AWS and Retail interact: 1. The obvious that everyone knows: Retail uses AWS's products, providing feedback and ideas for new services and features. 2. Employee transfers: it's quite common for people to move between Retail and AWS and vice versa, and they bring what they learned…

This is all a Devils Advocate post. I have no reason to complain about my (future) compensation. Working in the consulting division allowed me to make $BigTech money as an “Enterprise Developer” without studying a single algorithm, and being able to work completely remote from a low cost of living area....

As a soon to be employee on the AWS side and speaking very selfishly, I could see it benefiting AWS employees tremendously being separate from the low margin retail side. They would probably have benefits and compensation more in line with the other BigTech companies.

Employees at AWS definitely wouldn’t be as limited in what they can contribute to their 401K because they are considered Highly Compensated Employees and the contribution rate is weighed down by factory workers.

Re: AWS’s Share of Amazon’s Profit

#124

Post by scarface74 »

lotsofpulp wrote: post #73
runawaybottle wrote: post #51

Earlier quoted context omitted.

Competing on price never pays off imho. You’ll race to the bottom. Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. My experience: I once tried to corner the market on WoW gems by buying out the undercutters and setting my desired price. My money wasn’t long enough. I really don’t think anyone’s money is long enough :p

> Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. By which definition? It’s trivial to switch to a different website to order from, and Target/Walmart/Bestbuy/etc have significant market share.

1. Amazon already has your payment information. I was on my phone looking to order something. The first link that came up was Walmart. I went and searched on Amazon because I could just press “Order Now” and not have to create a new account and dig up my credit card.

2. I’m already paying for Amazon Prime. Why not get full use out of it for shipping?

3. Amazon marketplace has network effects. Third party sellers use it because the buyers are there.

4. I wanted to rent a movie on my Roku TV. Again, Amazon already has my payment information and I’m already signed in to Prime Video.

5. I get 3% discounts on my Amazon card when ordering from Amazon.

I’ve been downvoted to oblivion plenty of times about being against the government interfering in $BigTech whether it be Google, Amazon, or Apple so I’m definitely not proposing they should be broken up because of a “monopoly”.

Re: AWS’s Share of Amazon’s Profit

#125

Post by scarface74 »

andrewfromx wrote: post #21
tootie wrote: post #12

Earlier quoted context omitted.

Do you remember the days when everyone had their own data center and setting up a server involving drawing up specs then putting in a PO then waiting for it to get delivered on a truck to be racked and formatted? AWS is magic and the price is entirely justified.

Yes and also i clearly remember in 2007 trying ec2 for first time and asking, is it production ready? Could we actually use this vs. building out a cage. And in 2007 the answer was no. Something about no external IP addresses or no load balancer possible. But yes that cage was expensive and the last cage I ever got. AWS is magic and amazing.

You’re basing your experience on AWS from 2007?

Re: AWS’s Share of Amazon’s Profit

#126

Post by scarface74 »

echelon wrote: post #5
rvz wrote: post #4

Earlier quoted context omitted.

Which Amazon has thanked almost everyone and their grocery stores for jumping on their bandwagon and spending nearly all their VC money on these services. Those without any significant revenues will have a hard-time paying up that huge AWS bill if they dared to use K8s or auto-scaling features. I would not want to look at the balance sheet of a companies accounts or quarterly earnings if they cannot generate lots of…

Under these circumstances, how is AWS lock-in and cost escalation any different from Oracle of the past? Why would any startup shackle themselves to AWS or any cloud when it's not portable? Lambdas, in particular, seem like the worst idea in the history of ideas. Once your org adopts them, how do you keep track of these mysterious, business-critical pieces of functionality? How do you ever plan to port them to someth…

Do you realize how many software as a service vendors the average corporation is tied in to?

You’re always tied into your infrastructure once you have any type of scale. The pain of migration is huge.

I once worked with a company whose entire workflow was integrated with six or seven vendors through APIs.

Have you ever worked in the healthcare industry? The level of lock-in they have to their EMR/EHR would make you cry.

Re: AWS’s Share of Amazon’s Profit

#127

Post by RC_ITR »

mschuster91 wrote: post #102
RC_ITR wrote: post #97

Earlier quoted context omitted.

In general, investors would prefer two companies because those looking to invest in retail wouldn’t have to expose themselves to cloud & vice versa. That increase in demand for each component (investors who formerly ignored the stock owing to the above) would make the share price go up, all else constant. Amazon stock performs well because a lot of investors want access to both, so it’s not that big of a deal. Also J…

> Ultimately they won’t split until one of them stops being a world-eating monster because no one will have leverage to force it on Jeff. It may never happen as long as amazon exists. But I guarantee the day amazon cloud stops growing at insane rates, people will call for a breakup. People have been complaining about Amazon's investing policies (like reinvesting every penny instead of paying out dividends) for decade…

Exactly.

Re: AWS’s Share of Amazon’s Profit

#128

Post by 1592343403 »

9nGQluzmnq3M wrote: post #70
rexreed wrote: post #69

He's overly simplifying the contribution to profit by not understanding the contribution to expenses. It's not his fault because Amazon doesn't break it out that way. They don't allocate certain expenses to AWS and other expenses to other branches. While there's no doubt that AWS is very profitable, to say it contributes a certain percentage to overall profits probably misses the mark tremendously. It's probably and…

I would presume AWS is so large these days that Amazon retail's infra is only a small fraction of the fleet? Published data on their scale is thin on the ground, but this post from 2017 guesstimated that they had 4 million physical servers at the time, and AWS certainly hasn't shrunk since then: https://blog.sqlizer.io/posts/facebook-on-aws/

Amazon retail's total combined capacity usage can on most days fit entirely into the spare capacity that AWS keeps available for spot and burst usage by other customers

Re: AWS’s Share of Amazon’s Profit

#129

Post by lotsofpulp »

scarface74 wrote: post #124
lotsofpulp wrote: post #73

Earlier quoted context omitted.

> Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. By which definition? It’s trivial to switch to a different website to order from, and Target/Walmart/Bestbuy/etc have significant market share.

1. Amazon already has your payment information. I was on my phone looking to order something. The first link that came up was Walmart. I went and searched on Amazon because I could just press “Order Now” and not have to create a new account and dig up my credit card. 2. I’m already paying for Amazon Prime. Why not get full use out of it for shipping? 3. Amazon marketplace has network effects. Third party sellers use…

A monopoly would indicate there exists a lack of options for buyers or control of prices from a very large seller.

As it stands now, Amazon is a glorified Alibaba that sided with buyers in disputes.

You can find the same things on Amazon on Alibaba, Newegg, bestbuy, Walmart, iTunes, Google Play, the Amazon sellers own websites, etc. the buyer is in no way required or affected negatively by not interacting with Amazon.

So I’m struggling to see the point of labeling Amazon a monopoly when it doesn’t convey any useful information.

Re: AWS’s Share of Amazon’s Profit

#130

Post by dx034 »

ezeev wrote: post #15
jfim wrote: post #6

Earlier quoted context omitted.

> Why would any startup shackle themselves to AWS or any cloud when it's not portable? Depending on the startup, that may make sense if it allows for fast iteration. If a startup is trying to achieve product market fit, having a huge AWS bill is a good problem to have, since it means the product is actually successful.

If you're building on AWS properly, your usage scales with demand. So a huge bill should mean you have huge demand.

Only servers used for client requests. Dev and integration environments but esp data crunching can be a lot more expensive than serving web requests. And they're hard to keep cheap if you scaling is easy.
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