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AWS’s Share of Amazon’s Profit

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Re: AWS’s Share of Amazon’s Profit

#91

Post by yomly »

kvz wrote: post #85
dlhavema wrote: post #79

Earlier quoted context omitted.

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...

On the one hand that sounds weird and AWS could just offer any discount, on the other if they can get done the same on less resources, others can rent the freed up resources at a premium

That compute isn't free - it comes at the opportunity cost of being sold to a paying customer so it makes sense to price it internally even if it is "virtual"

Re: AWS’s Share of Amazon’s Profit

#92

Post by blahblah12 »

kvz wrote: post #85
dlhavema wrote: post #79

Earlier quoted context omitted.

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...

On the one hand that sounds weird and AWS could just offer any discount, on the other if they can get done the same on less resources, others can rent the freed up resources at a premium

This is called cross-org transfer pricing. It's a common practice in accounting. In fact, imagine a company where this doesn't happen. Retail decides that they can "excessively" use AWS. This contributes to waste and problematic accounting when it comes time to report finances.

https://en.wikipedia.org/wiki/Transfer_pricing

Re: AWS’s Share of Amazon’s Profit

#93

Post by biggestdecision »

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…

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?

Re: AWS’s Share of Amazon’s Profit

#94

Post by xchaotic »

kayoone wrote: post #81
kelnos wrote: post #63

Earlier quoted context omitted.

I think you're maybe mixing up different things? "Infinite scaling" doesn't mean your app is failure-free and constantly available. In my experience AWS's scaling features work pretty well, as does their on-demand provisioning. But they have very little to do with tolerating infrastructure failures. That's up to you, regardless of whether you're developing on AWS or on hardware you own.

Let me provide an example. When we recreated a big Elasticsearch cluster, AWS ran out of available instance types in that AZ resulting in the cluster never going into a green state because a node was missing. This is not something you typically worry about when you choose a cloud provider. Your tone is a bit condescending tbh, you don't need to lecture me about the importance of a fault tolerant distributed system.

yeah, kayoone response was to the argument “AWS is more expensive but it scales”. In fact it’s not magic and you still have to manage it so worth looking at alternatives such as bare metal, especially at scale.

Re: AWS’s Share of Amazon’s Profit

#95

Post by jldugger »

blahblah12 wrote: post #92
kvz wrote: post #85

Earlier quoted context omitted.

On the one hand that sounds weird and AWS could just offer any discount, on the other if they can get done the same on less resources, others can rent the freed up resources at a premium

This is called cross-org transfer pricing. It's a common practice in accounting. In fact, imagine a company where this doesn't happen. Retail decides that they can "excessively" use AWS. This contributes to waste and problematic accounting when it comes time to report finances. https://en.wikipedia.org/wiki/Transfer_pricing

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.

Re: AWS’s Share of Amazon’s Profit

#96

Post by fakedang »

cosmie wrote: post #74
mwakerman wrote: post #17

Earlier quoted context omitted.

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…

GCP too provides role based access.

Re: AWS’s Share of Amazon’s Profit

#97

Post by RC_ITR »

biggestdecision wrote: post #93
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…

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?

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 Jeff Bezos holds a disproportionate amount of voting power (part of why he’s the richest person is because he held on to an unusually high percent of an unusually valuable company).

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.

Re: AWS’s Share of Amazon’s Profit

#98

Post by jcrites »

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?

Amazon runs virtually everything on AWS. There are probably some exceptions for exotic infrastructure, but the vast majority of compute and storage systems at Amazon run on top of AWS. There's probably a team using every single AWS service somewhere in the company.

This doesn't mean that Amazon only uses AWS products, though. Amazon continues to use e.g. Akamai for static content hosting for some use-cases, in addition to using CloudFront for other use-cases, and other products beyond that.

Amazon also uses third-party services. For example, while Amazon has long been using Chime internally for IM, chat, and voice/video calling (Chime being the AWS solution for those things), they recently announced a partnership with Slack [1]. To summarize, Amazon will deploy Slack and use it for chat, while Slack will deploy Chime and use it for voice/video calling. I believe that Slack has been running on AWS since its founding [2]. I would hazard a guess that an undertone of the agreement is that Chime will continue focusing on its strength (which is voice/video calling for organizations) and probably not invest a lot in the chat features where Slack is already strong, and vice versa.

All that being said, certainly not everything runs on AWS across all of Amazon, which is a big company, with a host of acquisitions like Zappos, Twitch, Whole Foods, etc., that come with their own legacy or custom infrastructure.

But bread-and-butter software teams at Amazon all typically run on AWS.

[1] https://www.businesswire.com/news/home/20200604005766/en/AWS...

[2] https://aws.amazon.com/solutions/case-studies/slack/#:~:text....

Re: AWS’s Share of Amazon’s Profit

#99

Post by nl »

jldugger wrote: post #95
blahblah12 wrote: post #92

Earlier quoted context omitted.

This is called cross-org transfer pricing. It's a common practice in accounting. In fact, imagine a company where this doesn't happen. Retail decides that they can "excessively" use AWS. This contributes to waste and problematic accounting when it comes time to report finances. https://en.wikipedia.org/wiki/Transfer_pricing

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.

> Jury's still deliberating on whether AWS' incomprehensible billing is a signal of incompetence or sheer brilliance.

I think "between 50% and 80%" of the profits of the most valuable company in the world settles that.

Re: AWS’s Share of Amazon’s Profit

#100

Post by cinquemb »

kayoone wrote: post #48
kelnos wrote: post #18

Earlier quoted context omitted.

> We had all kinds of downtimes due to AWS over the years. No, you just had downtime, full stop. Failures are inevitable, regardless of whose datacenter you're using. Failure-tolerant architecture design minimizes (or eliminates, if you're lucky) the downtime caused by failures. I'm not saying that's easy or necessarily appropriate depending on the stage of your company, but foisting responsibility onto AWS is missin…

I am not "foisting responsibility". There are fallbacks and fail safes in place to mitigate such issues but that's not my point. My point is that they sell us a dream of infinite scaling, all managed and no more problems, which just isn't the case. I know, it's naive to believe that in the first place but the marketing certainly goes into that direction and some proponents spin this story all the time. Would the alte…

> Most certainly not, but it's still a question worth asking from time to time considering the extra money spent.

Esp if you are not vc backed and infra costs are already near the same order of magnitude as most of the dev team and are running into scaling issues…

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