AWS Market Share

Cloud Provider2021
Amazon AWS$62.2B
Microsoft Intelligent Cloud$60B
Google Cloud$19.2B

AWS history is quite interesting. Indeed, in the early 2000s, Amazon was trying to transition from e-commerce to a platform.

In other words, to expand product variety by keeping prices low, Amazon could not effectively keep expanding by launching its labels.

Instead, as the dot-com bubble burst, Amazon had to figure out a cheaper (in the long term) and faster strategy to scale.

That is where AWS came about.

As AWS CEO Andy Jassy explained on Tech Crunch: 

“In retrospect, it seems fairly obvious, but at the time, I don’t think we had ever really internalized that,” 

Moreover, he continued: 

“So very quietly around 2000, we became a services company with really no fanfare.” 

As Tech Crunch reports:

“What you may not know is that the roots for the idea of AWS  go back to the 2000 timeframe when Amazon was a far different company than it is today — simply an e-commerce company struggling with scale problems. Those issues forced the company to build some solid internal systems to deal with the hyper growth it was experiencing — and that laid the foundation for what would become AWS.”

Ever since, AWS has scaled to become an over $62 billion turnover company with incredible profitability.

Amazon AWS follows a platform business model, that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.

And the thing is, most of Amazon’s e-commerce profitability, as of 2022, depends on AWS.

While Amazon is still profitable without AWS, AWS contributes to most of Amazon’s operating profits. In 2021, Amazon generated almost $25 billion in operating profits. However, if you removed AWS, Amazon would have reported an operating profit of just over $6 billion.

In fact, while by 2021, Amazon, the e-commerce company, was still profitable without AWS. By September 2022, it turned out that Amazon e-commerce without AWS would be reporting huge net losses.

In Q3 2022, Amazon would have posted an operating loss of almost $2.9 billion without AWS’s contribution to the overall operating income of $2.5 billion.

In other words, if you were to remove AWS from Amazon, the company’s value would be reduced in less than half!

Read Next: Amazon Business Model (2022 Update), Amazon Flywheel, Amazon Mission Statement and Vision Statement, Is Amazon Profitable Without AWS?, Amazon Revenues Breakdown 2015-2021.

Read Next: Microsoft Business Model, Who Owns Microsoft?, Microsoft Organizational Structure, Microsoft SWOT Analysis, Microsoft Mission Statement, Microsoft Acquisitions, Microsoft Subsidiaries, Bill Gates Companies.

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