The Briefing
- Cloud computing has become a hugely important element of Amazon’s business
- In 2021, AWS accounted for 13% of Amazon’s revenue, but clocks in nearly three-quarters of their operating profit
AWS: Powering the Internet and Amazon’s Profits
The Amazon growth story has been a remarkable one so far.
On the top line, the company has grown every single year since its inception. Even in going back to 2004, Amazon generated a much more modest $6.9 billion in revenue compared to the massive $469 billion for 2021.
Most of these sales come from their retail and ecommerce operations, which the company has come to be known for. However, on the bottom line, the source of profit paints a completely different picture. That’s because 74% of Amazon’s operating profit comes from Amazon Web Services (AWS).
Here’s a closer look at the financials around Amazon and AWS:
| Year | AWS Operating Profit ($B) | Total Operating Profit ($B) | AWS % of Operating Profit | Revenue ($B) |
|---|---|---|---|---|
| 2021 | $18.5 | $24.8 | 74% | $469.8 |
| 2020 | $13.5 | $22.9 | 59% | $386.1 |
| 2019 | $9.2 | $14.5 | 63% | $280.5 |
| 2018 | $7.2 | $12.4 | 58% | $232.8 |
Ultimately, the data suggests that the cloud business has been, and possibly will always remain, a higher margin business and consistent profit center in comparison to ecommerce and the physical distribution of goods.
A Glance at AWS
AWS is Amazon’s cloud computing service that provides the critical infrastructure for an assortment of applications like data storage and networking. With this, they help fuel over a million organizations including (Read more...)