Cloud Computing: Amazon dives after losses blow out
Grazed from FinancialTimes. Author: Barney Jopson.
Amazon shares tumbled almost 10 per cent after big investments in cloud computing contributed to a larger-than-expected loss and led the company to forecast that it would stay in the red in the third quarter. The online retailer reported a net loss of $126m, or 27 cents per share for the quarter to June 30, against analysts’ expectations of a loss of 15 cents, prompting a fall of 9.8 per cent in its shares to $323.66.
Tom Szkutak, Amazon’s chief financial officer, said the loss partly reflected spending on Amazon Web Services, its cloud computing business, which is used by organisations ranging from the Central Intelligence Agency to Netflix. He said usage of AWS services was growing at more than 90 per cent and added: “With the great, strong usage growth rates we’re seeing we’re also investing in capex, in infrastructure to support that growth.”…


Amazon Web Services is unquestionably a disruptive technology force – prior to them essentially inventing cloud computing, organizations had to acquire and manage their own infrastructure and hence expend significant capital to grow. Since AWS and other cloud vendors popularized their model, infrastructure can be bought just like a utility. Like electricity or telecommunications, computing infrastructure costs can be closely matched to revenue.