Amazon says its cloud is 'a $5 billion business'

AWS generated $1.57 billion for Amazon in the first three months of 2015, nearly 7 percent of Amazon's total revenue

Amazon has finally shared some numbers about its cloud business, and not surprisingly they show that it's thriving and profitable.

Amazon Web Services brought in $1.566 billion in net sales for Amazon's first quarter, it said Thursday, up 49 percent from $1.05 billion AWS generated the same time a year ago. For this quarter, AWS netted a profit of $265 million, up from $245 million a year ago.

AWS is a $5 billion business "and still growing fast -- in fact it's accelerating," Amazon CEO Jeff Bezos was quoted as saying in a press release. He also called the group an "example of how we approach ideas and risk-taking at Amazon."

AWS now generates nearly 7 percent of Amazon's total revenue. Overall, Amazon's net sales for the quarter, which ended March 31, totaled $22.7 billion, up 15 percent from the $19.7 billion collected in the same period a year earlier. The company posted a net loss of $57 million in this first quarter, down from the $108 million it lost in last year's first quarter.

Thursday's earnings release marks the first time since the launch of its cloud service nine years ago that Amazon has broken out AWS quarterly revenue.

Previously, it has lumped sales from its rapidly growing cloud business in the category of "North America, Other," which also included revenue from other sources such as a co-branded credit card. Analysts and media have assumed that the vast majority of revenue from this category came from cloud operations. In the fourth quarter of 2014, that category generated $1.67 billion in sales for AWS, up from $1.17 billion a year earlier.

For observers of the rapidly-growing cloud computing space, the AWS numbers will provide more visibility into how not only that operation is faring, but also into general health of the market overall.

Microsoft expects to reap $5.5 billion in revenue from all of its cloud operations for fiscal 2015, which will end in June. In its latest quarterly report on Monday, IBM stated that its cloud services generated $7.7 billion in revenue in the past year, though that figure may also include outsourcing work IBM does on behalf of large enterprises and government agencies.

The price competition in the cloud market is fierce, said Thomas Szkutak, Amazon chief financial officer, in a conference call with investment analysts. Amazon has cut prices of various cloud offerings 48 times since the start of the service, taking advantage of decreasing hardware prices and improved operational efficiencies. He asserted that price is not the only factor in why customers choose AWS over competitors.

"Although price is a factor, the primary factor for customers to move to AWS is their ability to move quickly and be nimble and agile," he said.

Amazon's busy quarter included introducing products and services on a number of different fronts.

The company announced an unlimited personal storage service at $59.95 a year. It debuted a new marketplace for professional services, called Amazon Home Services, that connects consumers to plumbers, cleaners and the like. It also introduced the Dash Button, a somewhat gimmicky device customers can use to reorder household items such as soap.

For corporate clients, it debuted a cloud-based e-mail and calendar service called WorkMail.

The company has been ramping up its production of original video programming for Amazon Prime. In January, it signed a deal with director Woody Allen to produce a television series.

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