rtmark
LearnBonds.com

Amazon.com, Inc. Web Service Shrinking Margins A Big Concern

Amazon.com (AMZN) Amazon

Amazon.com, Inc. (NASDAQ: AMZN) finally released the much-awaited numbers for its Amazon Web Service that shows the segment could end up becoming a core business as the industry is expected to grow to $40 billion. The cloud business is growing at a much faster rate than the rest of the company’s core business, an indication that it could account for more than the 7% it currently accounts for, in total revenues.

amazon aws services earnings

The growth potential of Amazon Web Service goes unquestioned having grown by 49% in 2014 with the impressive rally expected to continue this year. Last year, the cloud business generated $4.6 billion in total revenue with CEO, Jeff Bezos, affirming that the unit is on course to generate $6.23 billion this year after generating $1.57 billion in the first quarter.

Amazon cloud growth shudders

Though Amazon makes most of its profits from its e-commerce business, further growth in the cloud business should go well with investors who have seen the company invest a great deal in many areas of growth. The growing demand for cloud services should work to Amazon’s advantage having been in the game for more than ten years, before the likes of Microsoft and Google followed suit.

Amazon’s cloud business is already disrupting the industry at large, having eaten into the hardware business of the likes of Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL). The trend is not expected to stop anytime soon with research firm Forester affirming that cloud computing could account for nearly 15% of the total spending online as the need for more internet technologies continues to soar.

First mover advantage

The fact that Amazon was the first in the cloud business has allowed it to enjoy an advantage in the fast growing space as other companies continue to play catch up. The only concern at the moment has to do with the shrinking margins of the cloud business, partly because of the ongoing investment in data centers.

Competitive pressure from the likes of Google and Microsoft may also weigh in on the margins going forward. The only way Amazon can stay in front of the curve in the cloud business is by adding new services, to avoid scenarios of competing on the price front something that is never good for business.

Amazon.com posted first quarter revenues of $22.72 billion up by 15% from a year ago, sales having grown by 24% to a high of $13.41 billion. For the second quarter, the e-commerce giant believes it could post revenues of between $20.6 billion and $22.8 billion.

Trusted & Regulated Stock & CFD Brokers

Rating

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

Rating

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Avatar

Viraj loves to write and express his views on anything related to Finance, Crypto, or Fintech. He has been covering Finance & Crypto for more than five years now. He likes Tesla. He also writes on Healthcare, and Technology among other stuff.