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Amazon Results Not Yet in the Cloud
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| Written by Mel Duvall |
Amazon posted some pretty solid results this week, as tech companies seem to be showing resilience in the face of an economic downturn.
The company said second quarter sales were up 41% to $4.06 billion, and profits doubled to $158 million, or 37 cents per share. Analysts had been looking to Amazon for some indication of where the economy was headed, particularly in the realm of consumer spending. But by the company’s own admittance, it may not be a good gauge.
In a conference call chief financial officer Tom Szkutak was asked if the economy had impacted Amazon’s results. “We don’t think we’re a good barometer for the economy,” Szkutak replied. “We’re focused on doing what’s right for customers.”
That, and the results were not quite as good as the numbers at first indicated. The profits included a $53-million non-cash gain from selling the company’s European DVD assets. Without that sale, profits were in line with what analysts had been expecting.
Many eyes in the technology world were focused on how the company’s Amazon Web Services (AWS) business was performing. Amazon launched the division in July of 2002, providing a collection of remote computing services offered over the Internet. Amazon Elastic Compute Cloud, also known as EC2, is a Web service which allows clients to rent computers to run their own applications. Customers essentially use Amazon’s virtual machines to run their applications and can increase or decrease capacity as required. Simple Storage Service, or S3, similarly allows clients to rent storage space.
While AWS has been around since 2002, it was only in the past year or so that it has gained prominence both in terms of offerings and awareness. So how is it doing? The company says more than 400,000 developers have registered to use AWS as of the end of the second quarter, up 30,000 from the first quarter. That represents an 8% increase. Not bad, but hardly stellar.
The company doesn’t spell out exactly how much it brings in from AWS, lumping it in its “Other” category of revenue. Other also includes revenues from the company’s co-branded credit card programs, Amazon Enterprise Solutions program and marketing and promotional activities. For the first six months ended June 30, Other sales in North America increased from $140 million in 2007 to $194 in 2008, a 39% increase. Including International sales, Other revenues climbed from $161 million to $237 million, a 47% jump. Now, that’s certainly more impressive.
In the grand scheme of things, Other revenues, including AWS, still represent only 6% of the company’s overall revenue. AWS is worth watching but it does not yet represent the future of Amazon.
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