Amazon – in its history of two decades – showed one of its most profitable quarter this year. Thanks to Amazon Web Service (AWS), its decade-old cloud computing business that is gaining traction quickly. And this mind-blowing quarter comes at the right time when the company was facing a little backlash for the last four quarters.
Today, the company’s net income stands at $513 million; and 56 percent of the company’s total operating income comes from AWS. In a statement announcing the earnings, Amazon’s CEO Jeffrey P. Bezos highlighted that the operating revenue for AWS has grown by 3 times in Q1 2016.
Without a doubt, Amazon has finally come out with flying colors after a series of mediocre earning reports for multiple quarters. Needless to say, this represents that more and more enterprises around the globe have started adopting Amazon’s cloud computing and hosting solutions.
SaaS to Rule the Amazon Cloud Market in 2016
Even though AWS started over a decade ago, it was not that big in the cloud market until few years ago. The recent traction could be attributed to a growing number of start-ups and large enterprises renting computing capacity, rather than running their own hardware and software. VentureBeat’s financial analysis on AWS performance found that AWS is contributing $687 million in operating income for the quarter, up $240M from one year earlier.
On the other hand, the global spending on public cloud services is anticipated to grow at a 19.4% CAGR, reaching more than $141 billion in 2019. Currently, AWS tops the market with Microsoft Azure, Google, and IBM following suit. Last year, AWS Cloud successfully managed to get 31% share of the global public cloud services market, while Microsoft and Google took 9% and 4% respectively.
One of the major contributors to the AWS’ success could be attributed to Amazon supporting the Platform as a Service, or “PaaS,” and the Software as a Service, or “SaaS,” models to enterprises. You may ask why? The answer is: SaaS model facilitates business to consume applications that are hosted online. This enables them to reduce their costs by paying only for what they use. It also allows them to enjoy seamless and painless upgrades and help them integrate with their existing data and systems. With such convenience, enterprises naturally tend to opt for SaaS models.
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The Bottom line: AWS Cloud Q1 2016 On a Roll Creating More Opportunities
In one of our previous blogs, we spoke about how AWS is taking the AWS cloud arena by storm. We also talked about how it features more than 10 times the computing capacity utilization than the next 14 largest companies who offer cloud services. AWS cloud is no doubt growing, but with various dimensions to it. There are a plethora of opportunities too that have found wings. And with opportunities come challenges.