tag:blogger.com,1999:blog-4503292949532760618.post6087409951075418443..comments2024-03-16T18:42:21.178-07:00Comments on DSHR's Blog: More on Amazon's MarginsDavid.http://www.blogger.com/profile/14498131502038331594noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-4503292949532760618.post-76030923934415647152013-12-04T12:35:43.139-08:002013-12-04T12:35:43.139-08:00Jack Clark at The Register has some interesting gr...Jack Clark at <i>The Register</i> has some interesting graphs <a href="http://www.theregister.co.uk/2013/12/04/cloud_comparison_analysis/" rel="nofollow">comparing the pricing of virtual machines</a> from leading cloud providers. They tend to show prices converging on the market leader, Amazon.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-2845658659941919512013-11-29T13:17:16.323-08:002013-11-29T13:17:16.323-08:00Paul Kunert at The Register has a piece on a repor...Paul Kunert at <i>The Register</i> has a piece on a report from Synergy Research Group that claims that <a href="http://www.channelregister.co.uk/2013/11/29/aws_q3/" rel="nofollow">AWS has more of the market than the next 4 players combined</a>. Those players would be salesforce.com, Microsoft, IBM, Google.<br /><br />The report claims that everyone, including AWS, is losing money. <i>The Register</i> appears to support that claim with a link, but the link goes to a <a href="http://www.theregister.co.uk/2013/07/25/amazon_aws_cloud_growth/" rel="nofollow">story that doesn't say AWS loses money</a>. That story does link to another story that points out that <a href="http://www.theregister.co.uk/2013/07/25/amazon_q2_2013/" rel="nofollow">Amazon as a whole lost money in Q2</a> but that doesn't show that AWS did.<br /><br />In any case, Synergy Research Group seems to have missed the big picture. Amazon's goal isn't to make money in the short term, it is to end up owning the market in the long term. The stock market understands this. AMZN stands at almost $400, thus financing investment in the long-term goal. AWS follows the same strategy as the rest of the company.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-27233316167766264952013-10-27T10:45:15.640-07:002013-10-27T10:45:15.640-07:00A very insightful piece by a former Amazon insider...A very insightful piece by a former Amazon insider pointing out that the reason Amazon as a whole <a href="http://www.eugenewei.com/blog/2013/10/25/amazon-and-the-profitless-business-model-narrative" rel="nofollow">doesn't make a profit despite running many profitable businesses</a> (such as AWS) is the scale of its investment in the future.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-10445220522795392632013-10-17T15:06:04.966-07:002013-10-17T15:06:04.966-07:00Here's an actual competitor pointing out that ...Here's an actual competitor pointing out that S3's margins are excessive. Serguei Beloussov, CEO of backup company Acronis Storage, provided his <a href="http://www.theregister.co.uk/2013/10/17/acronis_attacks_amazon_sez_itz_cheaper/" rel="nofollow">cost of ownership numbers</a> to The Register.<br /><br />Of course, just because it is possible for a competitor to undercut Amazon doesn't make it a good business strategy to do so. Remember what happened to <a href="http://www.slate.com/blogs/future_tense/2013/10/10/amazon_book_how_jeff_bezos_went_thermonuclear_on_diapers_com.html" rel="nofollow">diapers.com</a>.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-44622687782109470612013-08-15T07:32:41.613-07:002013-08-15T07:32:41.613-07:00Yet another piece, this time by Cade Metz at Wired...Yet another piece, this time by <a href="http://www.wired.com/wiredenterprise/2013/08/memsql-and-amazon/" rel="nofollow">Cade Metz at Wired</a> making the point I've made before that <a href="http://blog.dshr.org/2012/07/preservation-as-cloud-service.html" rel="nofollow">cloud is only economic for variable loads</a>; for base-load computing and storage it is way too expensive.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-70140379021341068632013-08-10T06:25:21.166-07:002013-08-10T06:25:21.166-07:00Ben Thompson writes an interesting piece Amazon...Ben Thompson writes an interesting piece <a href="http://stratechery.com/2013/amazons-dominant-strategy/" rel="nofollow"><i>Amazon's Dominant Strategy</i></a> and points out that:<br /><br />"AWS is ... a fraction – <a href="http://www.sec.gov/Archives/edgar/data/1018724/000119312512032846/d269317d10k.htm#tx269317_8" rel="nofollow">around 3%</a> – of their total revenue"<br /><br />He doesn't note that it is growing at 66%/yr, nearly double Amazon's overall revenue growth. "Technology and content" are about 6% of Amazon's operating expenses, and growing 68%/yr.<br /><br />As Amazon says, "Our financial focus is on long-term, sustainable growth in free cash flow per share." Not making a profit in the short term.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-32016068950981667902013-07-25T19:15:23.437-07:002013-07-25T19:15:23.437-07:00Amazon's cloud business continues to be a corn...Amazon's cloud business continues to be a cornucopia of cash, according to <a href="http://www.theregister.co.uk/2013/07/25/amazon_aws_cloud_growth/" rel="nofollow"><i>The Register</i></a> it "contributed to over $1.6 billion in revenue in the e-retailer's nebulous "Other" category this year". Of course, fountains of cash at Amazon don't actually turn in to profits. As <i>The Register</i> <a href="http://www.theregister.co.uk/2013/07/25/amazon_q2_2013/" rel="nofollow">reported</a>: "the company reported a net loss in its second quarter and forecast problems in its third quarter, ... a reflection of the company's "retail attitude", which sees it pour its money into forward development rather than profits."David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-6854236879899546722013-04-28T11:20:53.699-07:002013-04-28T11:20:53.699-07:00Even cloud providers now admit that once you'r...Even cloud providers now admit that once you're <a href="http://www.theregister.co.uk/2013/04/26/cloud_magic_number/" rel="nofollow">paying them $10K/month you'd save money moving the base load in-house</a>. They are talking about servers, but translating the number to storage it's a petabyte in Glacier, and a bit under 200TB in S3.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-51327245496050611132013-04-25T22:54:45.777-07:002013-04-25T22:54:45.777-07:00The Register projects AWS revenues over $2B for th...<i>The Register</i> projects <a href="http://www.theregister.co.uk/2013/04/26/aws_revenue_analysis/" rel="nofollow">AWS revenues over $2B</a> for this year.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-81849244005457345002013-04-21T23:26:42.092-07:002013-04-21T23:26:42.092-07:00Via Yves Smith's links we find a must-read pie...Via <a href="http://www.nakedcapitalism.com/2013/04/links-42113.html" rel="nofollow">Yves Smith's links</a> we find a <a href="http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-platformpricing-strategy/" rel="nofollow">must-read piece on optimal platform pricing</a>.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-13105533061719265912013-04-17T07:17:01.613-07:002013-04-17T07:17:01.613-07:00As I've pointed out, one reason that Amazon en...As I've pointed out, one reason that Amazon enjoys such lavish margins is that the cloud isn't really a competitive business. Microsoft's <a href="http://www.theregister.co.uk/2013/04/16/microsoft_azure_ga/" rel="nofollow">recent announcement that they will match AWS prices</a> shows this; a competitor would try to beat them. Jeff Bezos' comment above makes the same point indirectly.<br /><br />Everyone should read this <a href="http://www.newyorker.com/online/blogs/elements/2013/04/tmobile-verizon-monopoly-oligopoly-business-practices.html" rel="nofollow"><i>New Yorker</i> piece on oligopoly</a>.David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-23475855793730927582013-04-12T19:25:19.302-07:002013-04-12T19:25:19.302-07:00In his letter to shareholders, Jeff Bezos explains...In his letter to shareholders, <a href="http://www.theregister.co.uk/2013/04/12/amazon_shareholder_letter/" rel="nofollow">Jeff Bezos explains</a>:<br /><br />"We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to," Bezos <a href="http://phx.corporate-ir.net/phoenix.zhtml?p=irol-irhome&c=97664" rel="nofollow">wrote</a>. "These investments are motivated by customer focus rather than by reaction to competition."David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.comtag:blogger.com,1999:blog-4503292949532760618.post-8634785192508591452013-04-04T07:18:02.394-07:002013-04-04T07:18:02.394-07:00Amazon has cut the prices for HTTP requests:
&quo...Amazon has <a href="http://aws.amazon.com/about-aws/whats-new/2013/04/02/announcing-lower-request-pricing-for-amazon-s3/" rel="nofollow">cut the prices for HTTP requests</a>:<br /><br />"in the US Standard Region, we are reducing the price of every 1,000 PUT requests from $0.01 to $0.005 and the price of every 10,000 GET requests from $0.01 to $0.004."David.https://www.blogger.com/profile/14498131502038331594noreply@blogger.com