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AWS’s Share of Amazon’s Profit

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Re: AWS’s Share of Amazon’s Profit

#71

Post by monocasa »

runawaybottle wrote: post #51
fragsworth wrote: post #14

Earlier quoted context omitted.

It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to start raising prices. I am pretty sure Amazon's retail business is going to completely dwarf AWS in the long term, because they are currently willing to break even on it (and possibly lose money) just to outdo the competition.

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

I think they're viewing it instead as continuing to reinvest profits until they're a cyberpunk level corporate power. It's not that they're cutting prices, it's that they're using the excess to buy companies like Whole Foods and vertically integrate them rather than paying out to shareholders, or building a bigger war chest in an index fund.

Re: AWS’s Share of Amazon’s Profit

#72

Post by woeirua »

snowwrestler wrote: post #56
crazygringo wrote: post #23

Earlier quoted context omitted.

> It barely pays for itself Because they're constantly reinvesting for even bigger economies of scale. All investors are well aware that Amazon can start turning on major retail profits at any time it chooses. But the more it grows first, the more entrenched it is, the fewer competitors remain, and the even larger those future profits will be. Seeing as AMZN's stock price has increased roughly 25% since COVID started…

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.

Re: AWS’s Share of Amazon’s Profit

#73

Post by lotsofpulp »

runawaybottle wrote: post #51
fragsworth wrote: post #14

Earlier quoted context omitted.

It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to start raising prices. I am pretty sure Amazon's retail business is going to completely dwarf AWS in the long term, because they are currently willing to break even on it (and possibly lose money) just to outdo the competition.

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.

Re: AWS’s Share of Amazon’s Profit

#74

Post by cosmie »

mwakerman wrote: post #17
chrisco255 wrote: post #10

Earlier quoted context omitted.

Lambdas, at least the JS ones, are Node.js based and not hard at all to migrate to an alternative cloud service. You can even use a framework that handles all the cloud-specific functionality for you and works across AWS, Azure, GCloud, etc: https://www.serverless.com/ The lock-in really comes from AWS-specific services. Redis, Mongo, etc will have the same API no matter where you're hosting them, so it's pretty triv…

I agree and just want to add IAM to the list of AWS Lock In services. We provisions environments almost entirely using Config-as-code tools (packer, ansible, terraform) and generally have a good blueprint for what an environment looks like and the parts I’ve had the hardest time thinking about migrating to another cloud provider is all the IAM rules that magically give hosts/services the ability to talk to other serv…

I'm not sure about GCP, but Azure does offer role-based access[1] which gives you similar resource authentication magic to what IAM provides. The definition formats[2] even look fairly close to their IAM equivalents.

It's used in combination with Azure Active Directory, so the modality isn't 1:1 with AWS. But Managed Identities[3] is a feature that's rolling out across Azure which simplifies the model a bit, since it negates the need to create service principles in AAD beforehand.

[1] https://docs.microsoft.com/en-us/azure/role-based-access-con...

[2] https://docs.microsoft.com/en-us/azure/role-based-access-con...

[3] https://docs.microsoft.com/en-us/azure/active-directory/mana...

Re: AWS’s Share of Amazon’s Profit

#75

Post by Illniyar »

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 thought Amazon don't use aws for their main product. Do they use it for alexa?

Re: AWS’s Share of Amazon’s Profit

#76

Post by AmericanChopper »

mwakerman wrote: post #17
chrisco255 wrote: post #10

Earlier quoted context omitted.

Lambdas, at least the JS ones, are Node.js based and not hard at all to migrate to an alternative cloud service. You can even use a framework that handles all the cloud-specific functionality for you and works across AWS, Azure, GCloud, etc: https://www.serverless.com/ The lock-in really comes from AWS-specific services. Redis, Mongo, etc will have the same API no matter where you're hosting them, so it's pretty triv…

I agree and just want to add IAM to the list of AWS Lock In services. We provisions environments almost entirely using Config-as-code tools (packer, ansible, terraform) and generally have a good blueprint for what an environment looks like and the parts I’ve had the hardest time thinking about migrating to another cloud provider is all the IAM rules that magically give hosts/services the ability to talk to other serv…

IAM is simply one of AWS's killer features. It's just a service that's so good it differentiates itself from the competition. Lock-in based on quality is not the sort of lock-in that I'm most worried about, because it's very clear what I'm getting in return for it. The alternative to using IAM to begin with would be to commit to work comparable in scope to that required to migrate away from it in the future.

Re: AWS’s Share of Amazon’s Profit

#77

Post by milesskorpen »

runawaybottle wrote: post #51
fragsworth wrote: post #14

Earlier quoted context omitted.

It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to start raising prices. I am pretty sure Amazon's retail business is going to completely dwarf AWS in the long term, because they are currently willing to break even on it (and possibly lose money) just to outdo the competition.

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

They're not competing on price — they're competing on logistics, primarily. They're losing money to offer consumers an experience they can't get on any other platform. Way more defensible than price competition.

Re: AWS’s Share of Amazon’s Profit

#78

Post by fisherjeff »

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

Re: AWS’s Share of Amazon’s Profit

#79

Post by dlhavema »

Illniyar wrote: post #75
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 thought Amazon don't use aws for their main product. Do they use it for alexa?

I know a colleague that worked on Alexa stuff and he said they did use AWS infrastructure and part of his job was reducing the cost Alexa paid to AWS...

Re: AWS’s Share of Amazon’s Profit

#80

Post by mbesto »

rb808 wrote: post #59
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" yes today, but if GCP/Azure or something else comes in and competes heavily the margins could easily shrink to something negative.

Switching costs.
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