Amazon's Profits Are Floating On a Cloud (Computing) 83
HughPickens.com writes: The NY Times reports that Amazon unveiled the financial performance of its powerful growth engine for the first time on Thursday, and the numbers looked good, energized primarily by renting processing power to start-ups and, increasingly, established businesses. Amazon said in its first-quarter earnings report that its cloud division, Amazon Web Services, had revenue of $1.57 billion during the first three months of the year. Even though the company often reports losses, the cloud business is generating substantial profits. The company said its operating income from AWS was $265 million.
Amazon helped popularize the field starting in 2006 and largely had commercial cloud computing to itself for years, an enormous advantage in an industry where rivals usually watch one another closely. At the moment, there is no contest: Amazon is dominant and might even be extending its lead. Microsoft ranks a distant No. 2 in cloud computing but hopes to pick up the slack with infrastructure-related services it sells through Azure, the name of its cloud service. Amazon executives have said they expect AWS to eventually rival the company's other businesses in size. The cloud business has been growing at about 40 percent a year, more than twice the rate of the overall company and many Wall Street analysts have been hoping for a spinoff.
As for Google, the cloud was barely mentioned in Google's earnings call. Nor did the search giant offer any cloud numbers, making it impossible to gauge how well it is doing. But the enthusiasm of Eric Schmidt, Google's executive chairman, was manifest when he spoke at an event for cloud software developers this week. "The entire world will be defined by smartphones, Android or Apple, a very fast network, and cloud computing," said Schmidt. "The space is very large, very vast, and no one is covering all of it."
Amazon helped popularize the field starting in 2006 and largely had commercial cloud computing to itself for years, an enormous advantage in an industry where rivals usually watch one another closely. At the moment, there is no contest: Amazon is dominant and might even be extending its lead. Microsoft ranks a distant No. 2 in cloud computing but hopes to pick up the slack with infrastructure-related services it sells through Azure, the name of its cloud service. Amazon executives have said they expect AWS to eventually rival the company's other businesses in size. The cloud business has been growing at about 40 percent a year, more than twice the rate of the overall company and many Wall Street analysts have been hoping for a spinoff.
As for Google, the cloud was barely mentioned in Google's earnings call. Nor did the search giant offer any cloud numbers, making it impossible to gauge how well it is doing. But the enthusiasm of Eric Schmidt, Google's executive chairman, was manifest when he spoke at an event for cloud software developers this week. "The entire world will be defined by smartphones, Android or Apple, a very fast network, and cloud computing," said Schmidt. "The space is very large, very vast, and no one is covering all of it."
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Isn't AWS used for more than cloud storage and computing? It's also used for simple web hosting. Did they subtract the revenue from website hosting from that $1.5B figure.
What's the difference between cloud storage + computing and "web hosting"? AWS just provides the platform.
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Web hosting companies will take a steep penalty to you for using too much CPU or memory. And usually ask you for your money in advance.
The only difference between a web hosting company and Amazon is the billing model?
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They're three separate services (and only three of the zillion that AWS provides).
Cloud storage is just that: storage in the cloud (usually object storage, so you can access files using HTTP)
Computing is having a virtual system available, so take your laptop or desktop and move it somewhere else. Very handy if you need compute power some of the time but don't want to go through the hassle of getting rack space/networking/etc. You still have root on it, so the entire system and all provisioned resources ar
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Isn't AWS used for more than cloud storage and computing? It's also used for simple web hosting. Did they subtract the revenue from website hosting from that $1.5B figure.
AWS includes far more services than I've ever heard of. "Cloud computing" is EC2, which you could use for web hosting once you grow large enough to need a full VM (or 1000). I'm sure theyalso have some web hosting product somewhere for personal-sized sites too. All of that, plus the storage and so on - everything "cloud" - is AWS (I know of their queueing service and their load balancer service, but I've only looked for the obvious stuff).
The fact that it's collectively profitable despite the price wars
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In addition to EC2, there are lots of other services that are encompassed under AWS that compliment EC2 nicely - RDS is their service for standing up easy database instances that take care of most of the configuration headache associated with the big relational databases out there (pgsql, mysql, mssql, oracle). Route53 is a scriptable DNS service. CloudFormation gives you tools to automate standing up entire application stacks including DNS records, load balancers, application servers spread across availa
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It's a hell of a package that makes things like Microsoft Azure look like a joke in comparison
I found the exact opposite, but we are mostly a Microsoft shop. Working with Azure was dead simple, including setting up auto-scaling (Which wasn't offered by Amazon, at least when we were looking), so that our website scales up during peak times, and drops back down during the quieter times, automatically. It also ahs staged publishing which we use a lot, and the ability to switch our public website between any of the multiple slots INSTANTLY with no downtime is also a very big plus. Again, something we
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Auto scaling in AWS is far more powerful than Azure. You can scale based on several different metrics, not just CPU load. It is not "just there" like in Azure in that you must explicitly configure it, but it is worth it for the massively increased control. You can easi
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Staged publishing on Azure is limited to 5 slots, not 2. But you are correct, it doesn't scale out to 200 slots. However, in Azure, you pay for the first slot, the additional 4 are free, while the same isn't true in AWS.
As for SQL performance in Azure, I can't make an exact comparison, but you always have the option of running your own SQL server if you don't like the SQL Service. And even the cheapest Azure plan gets your point in time backup/restore, although the amount of time increase as you change s
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Re: And it's gonna rain (Score:2)
You obviously know nothing about networking or the slammer worm because it affected the discovery/locator service on port 1434, not 1433, and yes, I know networking very well, thank you.
You might as well say the next time there is an http exploit all the web servers in the world are going to get hosed. Maybe we should put all web servers behind our firewalls to be safe. LOL.
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As for AWS vs Azure performance, I'm not sure how you were testing but based on your "expert" opinions which are sorely misinformed, I'm guessing you did something really boneheaded. A P3 instance is set to give a minimum of 735 IOPS every second. So if you were getting less than one, I'd say that was a problem with the user. We use Azure to run our production sites and haven't seen anything of the sort you describe.
On Azure, SQL databases can be connected to from anywhere, any IP. There is no firewall at all.
Uh, no. You have to explicitly allow IPs in. Here's a link to "Azure SQL Database Firew
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Just out of curiosity, I fired up a D14 VM and loaded SQLIO on it. It came back with 253713 IOPs. If you got less than one, you were doing something very very very wrong. BTW, there is no reason to load SQL server of any type on the machine as SQLIO doesn't use it, so uh...yeah.
Did you set up a VPN to your local machine and then test how many IOPs you get to your local machine over a network share? LOL.
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If you use CloudFormation, you get auto-scaling. In fact, if you write your own CloudFormation template, you can get easy drop-down menus of minimum / maximum instances, and how many to scale at a time.
No, Amazon doesn't have direct publishing from Visual Studio, but we've worked around that by using a Jenkins continuous integration environment and Chef. Jenkins automatically builds any code merged into watched Git branches, and if the build succeeds, drops it into an S3 bucket. In 15 - n minutes, the de
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I might be mistaken, but according to what Amazon's description of RDS, they don't support read replicas of MSSQL.
Using Read Replicas, Amazon RDS for MySQL, PostgreSQL, and Amazon Aurora...
You can with Azure. You can also run your own SQL server if you prefer that as well, and you can set up VPNs and wall off sections, and even use your own local SQL server for fault tolerance (or performance of other local processes). I haven't seen anything you mentioned that you can't do in Azure (minus perhaps having a direct connect to their azure cloud -- but I haven't checked into that ei
Good for Amazon! (Score:1)
Amazon is my favorite nonprofit organization! Their investors are footing the bill for that 100 pound room air conditioner I had shipped to me via Amazon Prime 2 day shipping, and all those times they spent 2-3 dollars to to ship me a 5 dollar item.
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Amazon is my favorite nonprofit organization! Their investors are footing the bill for that 100 pound room air conditioner I had shipped to me via Amazon Prime 2 day shipping, and all those times they spent 2-3 dollars to to ship me a 5 dollar item.
Amazon is squeezing the shipping carriers to lower shipping prices, so don't bet that they lost money on those packages.
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It will be interesting to see at what point the government goes after them for predatory market practices if they're only sustainable because of massive revenue/profit from other division
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It will be interesting to see at what point the government goes after them for predatory market practices if they're only sustainable because of massive revenue/profit from other divisions.
I'm not sure I'm interested in finding out how the government thinks it can fix Internet markets.
It'd be interesting, but I don't think it'd be a very fun experiment for us Internet users.
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And they absolutely don't make up for it when someone pays their Prime membership and only orders 4 things a year.
It seems like the future (Score:3)
Amazon has really been a stealth company (Score:5, Insightful)
What is probably the saddest is Microsoft. Their two biggest cash cows (Windows and Office) are under tremendous pressure. And they really have trouble innovating in ways that are replacing that income. They chase everybody else, late to the game: mp3 players, search, cloud services, online email, smartphones, etc. Their constant focus on Windows over the Ballmer years really blinded them to all else that was an opportunity in the computing world. And so companies like Amazon, Apple, and Google are there instead.
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I suppose (from TFS)
had something to do with. I think there are very few companies, including profitable ones like Microsoft, that have that luxury.
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. I think there are very few companies, including profitable ones like Microsoft, that have that luxury.
I think any company can do the same, as long as they convince their large investors they have some sort of long-term plan that justifies it. While stock prices are batted about by people chasing quarterly results, those speculators aren't going to evict the board of directors, they'll just sell and move on. It's the large, long-term investors, the pension funds and mutual funds and so on, who will make the effort to cut the head off a company if they think the current board/CEO are fools. As long as th
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Rather depends how big those losses are.
I don't have any MSFT stock, but if I did I'd be pretty nervous if Carly doesn't get the nomination.
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The really do have an insane amount of cash - billions, years of operating expenses even if cashflow slowly tanked.
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Except MS still makes a lot of money. Amazon does not. Same with Google, their earnings went up something like 20% year over year.
i got rid of my prime because it's $99. the new kindle subscription service is crappola. best buy and other B&M stores have deals as well where i can stop by after work. sometimes it's nice to take a walk during lunch time
i hardly buy anything from amazon any more
Re:Amazon has really been a stealth company (Score:4, Insightful)
1. Cultural disinhibition: They started selling books; but never seemed to have fossilized into the 'We are a bookstore. I can see maybe expanding into selling some bookmarks, or paperweights; but hand tools? How absurd!' model. 'Books' was merely a special case of more or less rectangular objects that are legal to send through the mail. They've since expanded into an ever larger collection of more or less rectangular objects that are legal to send through the mail, without much concern about what they are.
2. Adequately competent implementation: Remember 'Microsoft PlaysForSure', the killer ecosystem of hardware, software, and a competitive marketplace of music sellers(almost always cheaper than iTunes)? No? That's not very surprising, they don't really deserve to be remembered. How about 'Ultraviolet', the 'cloud-based digital rights library' that is somehow associated with blu-ray, some media players and streamers, and various retailers; but is so dysfunctional that I can't actually summarize exactly what the hell it is? No? I can't imagine why.
Amazon, though, while they don't lead the pack, knows how to get the job done well enough (their Kindle e-readers and 'FireOS' tablets all have at least adequate industrial design and build quality, and 'FireOS' is arguably nicer than some Google-blessed-but-vendor-skinned versions of Android, despite being a hostile fork; and their media-streamer hardware and software are both more or less painless). You don't necessarily go to them for the premium gear; but they are definitely good enough that they don't actively sabotage the appeal of the low prices.
3. Logistics. I don't know how they do it(if I did, I'd probably be a whole hell of a lot wealthier); but when they decide to sell something, they know how to make it impressively cheap compared to the competition, whether it be books or VM time.
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They started as a bookseller, then moved slowly into other merchandise
They started as a method to sell and distribute goods on the internet. Books were only their choice for a physical manifestation of the method. I guess you are too young to remember what people were speculating on back in the "boom."
Re:Amazon has really been a stealth company (Score:4, Interesting)
And now they are producing their own entertainment a la Netflix.
And they are making money from providing the back end for Netflix. So Amazon is producing their own content a la Netflix, AND Netflix is writing them a fat check every month. Netflix even has a public case study about how they use AWS ... and contribute to making AWS better.
http://aws.amazon.com/solution... [amazon.com]
http://www.fastcolabs.com/3013... [fastcolabs.com]
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They made a search engine before Google, a smartphone before Apple and online email before I think anyone else (96).
They've been horribly mismanged, but incredibly innovative at the technical level. But they tend to not put marketing muscle behind it, and leave industries to other companies as opposed to aggressively pursuing them.
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And that is because brick-and-mortar stores, by and large, suck. Do you go to a brick-and-mortar store, find exactly what you want, pay, and leave? Rarely. OK, so you don't see what you want and ask a salesperson. What do you get? A dumb look, often enough. Suppose you get the salesperson to understand and help... "Oh, we don't have that but we can order it for you if you come back in a week". Yeah. I could have done that myself, genius.
Even worse if the item you're looking for was advertised recent
Personal Anecdote (Score:4, Interesting)
I'm a Google Fanboy so when I wanted to set up a cloud server for a webapp I went straight to Cloud Compute. I had been burned by AWS phantom charges in the hundreds of dollars that could not be identified from their management console. Starcluster based OpenMPI "hello world" experiment turned $500 CC expense.
Anyway, right as I'm getting settled in to Cloud Compute(very happy with their tutorial on setting up mongoDB etc.) I'm building my web app and Cloud Compute suspends my account for terms of use violation out of the blue. No explanation. Just got flagged by heuristic analysis based on CC country vs. IP address continent probably(on vacation).
Whatever reason they flagged the account, I went through a nightmare ~1 week trying to get my account unfrozen. I eventually gave up and started a new AWS account which is now billing me $30/month for a Windows Server 2008 "Workspaces" instance I NEVER use. Moral: Google TOU "Kangaroo Courts" and shit customer support in appeals lost them my business, so I have a hard time crying for my favorite company on this front.
If they can't handle their shit with someone who WANTS to give them money I have no sympathy.
Re:Personal Anecdote (Score:4, Insightful)
And it sounds like you need to spend some time looking through the AWS console. If something shows up on your bill in AWS, it is running somewhere and you most certainly set it up. The entire process is completely automated so the only human error is your own.
I help run six AWS accounts, ranging in monthly expenses of $400 to over $12,000, and never had a billing issue. In fact, on that bigger account we were leery of the costs as well so we setup an auditing system to keep an eye on transfer costs and S3 usage on the servers themselves. The numbers our auditing system provided matched what Amazon was telling us down to the tenth of a cent. Many transactions differ by a tenth of a cent because I imagine our auditing system was tracking at a faster pace and Amazon rounded up somewhere in the difference.
We do not use their Workspaces service but I am pretty sure the moment you create a Workspace, there is a box sitting there running for you at all times so it doesn't matter if you use it or not. The service is meant for people who work remotely constantly. If you want to be billed only when you are using a box, you can setup an EC2 instance and only turn it on when you need to use it.
I think there are even apps for desktop or smartphones that can do that for you (turn the EC2 instance on when you want to connect).
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In my four years of using AWS, attending Amazon events, webinars and participating in cloud computing forums, I have never seen a billing issue that was not caused by the user or a user sharing the account.
The only billing issue I have ever
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And if you want to run large clusters on Amazon - feel free to try our software: https://clusterk.com/ [clusterk.com] We can utilize A
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The rest of your message also makes no sense - even if Starcluster nodes can't be shutdown using Starcluster's own management, then simply go to the Amazon console and shutdown them.
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It's another story for Amazon S3...
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I'm an anonymous Google Fanboy :) (Score:1)
I believe you
It is a cycle. (Score:5, Insightful)
A bigger machine in a far away place always had the cost advantages of the economy of scale. Everytime there is a jump in connection speeds and bandwidth some customers found it cheaper to "out source" computing to a remote machine. But eventually the advantages of local storage and local computation adds up. So let us see how long this iteration lasts.
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Who knew in 2000 that one day there'd be a brick with buttons that you could play realtime amazingly-realistic 60 fps 960p games on?
People change, software changes, hardware changes. Change happens.
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Some kind of client-server architecture has pretty much always been around, and it always will (barring societal collapse). It's just been a matter of how widespread it was.
Today's computing model is continuing to shift towards mobile devices with finite power supplies, thermal envelopes and limited/fragile storage. The batteries, storage density and mobile processors will continue to improve,but it's always going to be attractive to offload storage & compute to a datacenter with ample power, cooling
Power-limited but also connection-limited (Score:2)
Today's computing model is continuing to shift towards mobile devices with finite power supplies, thermal envelopes and limited/fragile storage.
And expensive connections. The going rate for a cellular Internet connection in the United States is $10 per GB uploaded or downloaded.
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The big issue with going to offsite data centers is that WAN links are expensive. Try moving a terabyte of data on a cellular connection, and the bill may be in the tens of thousands of dollars. Even on normal lines, it can be more expensive in the long run to pay the metered bandwidth as opposed to putting a disk array or a tape silo in house.
This also affects recovery. Something happens and a bare metal restore is needed. One -might- be able to ask a cloud provider to mail a bunch of tapes, but it mig
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Back when IBM executive predicted "the world will probably need six computers", the main computing model was a mainframe at a distant location and time share on it via (overpriced) telephone lines and VT-100 terminals. Eventually workstations appeared and the move was to get off the mainframe and do local computing. Then came along Sun, "The network is *the* computer" and diskless workstations that would boot into an X-11 display terminal off a distant server. Well, PCs came along and desktop became powerful enough to run even fluid mechanics simulations. Then came high performance computing, and now the cloud.
A bigger machine in a far away place always had the cost advantages of the economy of scale. Everytime there is a jump in connection speeds and bandwidth some customers found it cheaper to "out source" computing to a remote machine. But eventually the advantages of local storage and local computation adds up. So let us see how long this iteration lasts.
The difference is that we still have really strong clients now and use the back end mainly for storage and some computation. It's not very comparable.
The other difference is that the technologies in use today make the "cloud" pretty much infinitely expandable, unlike a mainframe. Amazon has petabytes of storage and adds more continuously.
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Re:It is a cycle. (Score:5, Insightful)
This can work both for and against both local and remote/cloud options: Back when anything that touched the mainframe needed 6 signatures and a blessing; but you could classify an IBM-compatible as an 'office supply' and just have it on your desk and doing stuff, part of the virtue was in cutting through red tape, not in enjoying DOS on a slow machine with virtually no RAM. These days, especially for individuals or small outfits, without technical expertise available, 'the cloud' wins not so much because local computers are expensive(since they aren't, they've never been cheaper, either absolutely or per unit power); but because 'the cloud' is something you can use just by plugging in a URL and following directions. IT geeks are correct to point out that 'the cloud' is neither impregnable nor as well-backed-up as it likes to pretend to be; but for a non-techie user who will lose all their data as soon as their HDD dies or they lose their phone, it's still a step up.
For larger outfits, who have technical expertise available(and whose needs are complex enough that they will need IT and/or developers whether they go 'cloud', local, or some combination of the two), it is much more a straight battle on cost, security, and reliability; but ease of use and ease(or nonexistence) of management is huge for the consumer side.
Competition (Score:4, Interesting)
Re: Competition (Score:2)
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Given that Microsoft seems to be investing heavily in Azure, I'd wonder exactly how they plan to beat AWS. AWS had some new machine learning algorithm added a month ago; Azure doesn't have that. Either way, however, is a win. If Microsoft's making some fatal mistake with their new business model, then maybe they'd go bankrupt and help the industry by going open-source before death. If Azure stays where it is or ranks up in usage with its SaaS model, then there'll probably be some interesting competition between them two and Google with large user bases. Either way, there's competition, which will (almost) forever spiral downward prices and upward capabilities.
The scary thing about Microsoft is that they have at least 10s of billions of dollars in the bank. They will likely never go bankrupt, but I'm not sure they'll ever make money in computers again if the Windows/Office gravy train ever comes to a halt.
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You really think that's where they make most of their money? You've never read an 8-K, have you?
Azure Machine Learning (Score:4, Informative)
Incorrect. http://azure.microsoft.com/en-us/services/machine-learning/ [microsoft.com]
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Honestly, ML and integration with other MSFT products is all that Azure has going for it. I knew AWS first, but really got more into each of them at about the same time. Azure's API is pretty convoluted and doesn't handle multiple actions at the same time (so in opening a firewall port you have to wait for the first action to fully complete before adding the next firewall opening on the same system, and each action takes a few minutes). On the plus side, they do support a number of Linux distros.
It's bee
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Re:So, where's IBM in all of this? (Score:5, Insightful)
Seems like this should really be IBM's forte. I wonder why they didn't jump into it with both feet.
-jcr
Cheap commodity services was never IBM's forte - they don't want to rent you a $20 virtual server that you maintain yourself, they want to sell you a million dollar mainframe and $10,000 Intel servers that you pay IBM to maintain.
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IBM wants to sell you some sort of unique, value-added, hardware and/or software feature that makes going with them worth it over going with the commodity product(presumably, this is why they sold of PCs and low-end servers). Some customers do want this; but it's a very, very, different offering from the more commodified cloud providers(Amazon, Google, a
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Operating income is not profit (Score:3)
MS is a "distant" #2? (Score:3)
The summary appears incorrect. The linked article says that MS has annualized revenue of $6.3 billion from "cloud" business.
Google's $1.57 billion translates to an annual number of $6.28 billion from Amazon Web Services.
I'm not sure how either company defines what is included in those numbers.
Does anyone have better information or metrics?
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Microsoft, though, also includes revenue from different online applications into that figure. Its revenue from a cloud business called Azure, which is more directly comparable to Amazon’s cloud services, was recently estimated by Deutsche Bank to be as little as one-tenth of that from AWS.
Source:
http://www.nytimes.com/2015/04... [nytimes.com]
Microsoft's numbers include Office 365 and other service revenue, not just straight Azure services. Where are you getting the $1.57 billion number for Google?
Amazon's profits are floating on a Cloud? (Score:1)