Amazon’s Cloud Revenues, Examined

Grazed from InformationWeek. Author: Charles Babcock.

Amazon.com’s Web Services unit is gaining larger cloud customers than the developers and startups who first found a home on its EC2 compute service. That’s one reason two analyst houses have come out with upside predictions for the firm.

The previously faltering stock moved toward recovery yesterday after Morgan Stanley analyst Scott Devitt upgraded his rating on the NASDAQ-traded equity to "overweight." The stock went up $9.31, or 3.59%, in a day to close at $268.46 — its highest level ever. If it were broken out into a separate company today, AWS would be worth $19-$30 billion, with a share price of $41 to $66. The high end might be justified because Amazon’s EC2 is moving beyond startups to enterprise customers who are starting to rely on its services…

In addition, the Australian firm Macquarie Securities Group came out with an estimate of $2 billion in Amazon Web Services’ revenues in 2012, or about 33% higher than the $1.5 million I had previously been told. Jason Hoffman, CTO of Joyent in San Francisco, has experience building cloud infrastructure. In an interview in early November 2012, he predicted that Amazon was headed toward revenues of $1.5 million for the year. Asked yesterday whether he had revised his estimate, he said yes — the earlier estimate had been based on Amazon.com’s reported revenues in the "other" category in June. On Oct. 25, Amazon reported its "other" revenues for North America were $1.6 billion for the first nine months of 2012 versus $972 million for the first nine months of 2011…

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