Cloud computing dominates Amazon profits

AWS profits grew 45% year on year as the cloud continues to be lucrative for the tech giant

Amazon reported improved earnings on Thursday, raking in over $3 billion from 2018, but a large portion of this has come through its cloud computing arm, AWS.

The leading cloud provider's profits grew 45% year on year, continuing an annual trend of growing by at least 40% each year. The cloud division has become crucial for the whole of Amazon for both revenue and profits.

"Amazon had a blowout quarter, led by its AWS public cloud division. AWS grew 45% year on year for the quarter at $2.3B," said Patrick Moorhead, an analyst at Moor Insights & Strategies. "The AWS business is very profitable, generating $1.3B in operating income, more than all other businesses combined. I attribute this growth to its increased flexibility through 'elastic' capabilities as well as increased variability across EC compute capabilities.

"I will be interested to see how AWS's recently announced AI PaaS and SaaS services fare as they appear quite compelling."

Indeed, the PaaS offerings proved a big hit during the company's Re:Invent conference in November. Lots of effort and marketing had gone into customisable services, such as the AWS Marketplace for machine learning and AI. This, combined with a whole host of new offerings and new partnerships, such as Fender guitars, Formula 1 and Zurich Insurance, painted a picture of good health for the cloud division of Amazon.

The company as a whole reported its third record profit in a row, thanks to a strong year for cloud computing, advertising and a successful festive period. The Seattle-based company's 2018 profit of $3.03bn, or $6.04 a share, is up from $1.86bn, or $3.75 a share, on the same quarter a year earlier. Meaning revenue grew 20% to $72.38bn. Also providing a cash injection is its voice-controlled virtual assistant Alexa, and the Echo devices.

"Alexa was very busy during her holiday season," said CEO and founder Jeff Bezos in a statement. "Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions of more devices from the Echo family compared to last year."

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