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AWS’s Share of Amazon’s Profit

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Re: AWS’s Share of Amazon’s Profit

#131

Post by dx034 »

woeirua wrote: post #72
snowwrestler wrote: post #56

Earlier quoted context omitted.

It’s speculative to say that “Amazon can start turning on major retail profits at any time it chooses.” Amazon has not done it yet, so there’s really no proof that it would be so easy, or even possible. I know the party line, which is that Amazon chooses not to take retail profits because they would rather invest in growth. But invert that statement to understand it a different way: it implies that when they choose t…

Just look at how much money Amazon is spending on Prime shipping. It's insane. They're never going to turn a profit, because as soon as they stop subsidizing shipping customers will go elsewhere. There is no reason to expect Amazon's retail arm to ever be more profitable than Walmart is.

Isn't the idea behind prime shipping that with enough volume, any product in demand should already be stored close to the customer? Their expanding fleet of aircrafts make me doubt that it works that well but who knows, maybe their air cargo as a percentage of all shipping is decreasing drastically.

In the end, online stores aren't that hard to build and local stores can become competitive if Amazon really decides to cash out. Amazon is growing so fast because they don't really turn a profit, not because they pushed everyone else out of the market.

Re: AWS’s Share of Amazon’s Profit

#132

Post by dx034 »

yazaddaruvala wrote: post #34
legitster wrote: post #20

This drives me mad. I have no idea why Amazon even bothers with the retail side. It barely pays for itself, they are already the biggest player by a mile, and there is no horizon in which economies of scale start paying off (the uptick of demand from Covid probably lost them money!) The only thing that makes sense to me is some political long play. The Amazon retail operation employs a lot more people in a lot more p…

Disclaimer: I work at Amazon and own AMZN, but I have no inside knowledge about this and my opinion is my own. If investments into efficiency and scale can produce AWS, and create an entirely new market segment; couldn't continued investments into efficiency and scale produce the next-AWS?

It could, and finding the next big thing is extremely profitable. But few companies are able to repeat that process. However, with enough money AMZN could become like Microsoft and successfully build their own products if others have shown that it's worth it. Microsoft also uses profits from some business lines to pay for losses in a lot of ventures of which only very few work out.

Re: AWS’s Share of Amazon’s Profit

#133

Post by andrewfromx »

scarface74 wrote: post #125
andrewfromx wrote: post #21

Earlier quoted context omitted.

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 ?

did you read what I wrote? It was just a nice little story about trying aws for the first time in 2007 and then never getting a cage again. It was PRO-aws.

Re: AWS’s Share of Amazon’s Profit

#134

Post by kdeldycke »

jcrites wrote: post #103
jldugger wrote: post #95

Earlier quoted context omitted.

Indeed half the point of AWS was to facilitate cost accounting. Probably because Bezos thought they had expertise in online marketplaces that would transfer. Jury's still deliberating on whether AWS' incomprehensible billing is a signal of incompetence or sheer brilliance.

Designing billing for a service can be really challenging. The ideal pricing structure exactly aligns the incentives of the customer with the costs of the service provider. As a service designer, it is challenging to achieve this and strike the right balance. One naive solution is to account for all of the possible costs that users generate, and surface them with a price in the bill. But this can result in extremely…

Thanks jcrites for sharing some details on the genesis of AWS SES pricing plans!

I just added your contribution to my collection of resources on cloud billing: https://github.com/kdeldycke/awesome-billing/commit/df095efa...

Re: AWS’s Share of Amazon’s Profit

#135

Post by mbesto »

fisherjeff wrote: post #78
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…

Printing money until the next big capital expense comes up it and it briefly looks like it’s burning money, that is

> next big capital expense comes up it

Which is then fueled by cheap credit and already existing high levels of free cash flow. It's not a problem until demand dries up, which as you are probably aware, does not look like its slowing down anytime soon.

Re: AWS’s Share of Amazon’s Profit

#136

Post by swyx »

cromulent wrote: post #101
swyx wrote: post #57

I'm not sure if this helps or hurts Tim's assertions (not mentioned in this piece, but from context he wants AWS to be spun off into a separate company). if AWS' share is so high, would AMZN shareholders approve a spinoff? does it matter since they get ownership of new-AWS anyway? unclear whatever it is I think Tim has a research agenda here and we shouldn't be surprised to see him come up with a more forceful blogpo…

If AWS had been a separate company, then he probably wouldn't have felt the need to quit over the whistleblower incidents. As he describes here, under "What about AWS?". "AWS...is a different story". https://www.tbray.org/ongoing/When/202x/2020/04/29/Leaving-A...

right but I'm saying in this particular piece I don't think he's made a strong case either way to the people who will decide.
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