Amazon's Cloud-Profit Margin Just Tumbled
Amazon's (NASDAQ: AMZN) cloud-computing business is a monster. Amazon Web Services (AWS) scoops up around one-third of global spending on infrastructure-as-a-service and platform-as-a-service, and it's become a mission critical provider to many of its customers. Free from managing their own servers, AWS customers can scale their infrastructure quickly and painlessly.
But as easy as it is to scale up usage of AWS's various cloud services, it's also easy to scale down. As economic uncertainty forces companies of all sizes to take a hard look at costs, the cloud is on the chopping block. Companies aren't moving away from AWS or cloud computing, but they are discovering waste, reducing consumption, and trading down to cheaper services.
AWS grew revenue by 20% to $21.4 billion year over year in the fourth quarter, but costs grew by nearly 30%. This led to a slight decline in operating profit for the segment. AWS produced operating income of $5.2 billion, down from $5.3 billion in the prior-year period. Segment operating margin fell to 24.3%, down more than five percentage points year over year.
Source Fool.com
