AWS Growth Provided Amazon with Another Boost in Q3

Amazon Web Services (AWS) growth continued to be strong in Amazon’s third quarter (ended Sept. 30) and the company picked up “several new customer commitments and major migrations,” it said Oct. 24.

AWS revenue grew to $9 billion in Q3 from $6.7 billion, while AWS operating income increased to $2.3 billion from $2.1 billion. Total Amazon Q3 revenue jumped 24% to $70 billion.

“AWS growth and margins remained steady with Q2,” Colin Sebastian, Baird Equity Research senior research analyst, said in a research note.

“We continue to invest in AWS,” Amazon CFO Brian Olsavsky told analysts on an earnings call. “We continue to feel really good about not only the top line, but also the bottom line in that business, but we are investing a lot more this year in sales force and marketing personnel, mainly to handle a wider group of customers [and an] increasingly wide group of products,” he said, adding: “We continue to add thousands of new products and features a year, and we continue to expand geographically.”

Amazon, meanwhile, has $27 billion in future commitments for AWS from customers and that’s up 54% year-over-year,” he said, noting that’s done with a “combination of price and capability that we think is unmatched,” he said.

The company is also “looking forward to” its re:Invent Conference in Las Vegas, Dec. 2-6, where it welcomes more than 65,000 conference attendees, he told analysts.

Amazon once again singled out several AWS milestones in its earnings news release, including the fact that it announced the general availability of Amazon Forecast, a fully managed service that uses machine learning (ML) to deliver highly accurate forecasts based on the same technology used by Amazon.

In new customer commitments and major migrations, Cerner Corp. selected AWS as its preferred artificial intelligence and ML provider to advance better patient health outcomes; The Globe and Mail and Old Mutual Limited selected AWS as their preferred cloud provider; home appliance maker Galanz selected AWS to “enhance the consumer experience and expand” its Internet of Things (IoT) platform in more than 200 countries; and in China, Huashan Hospital, affiliated with Fudan University, adopted AWS to accelerate its digital transformation, Amazon said.

AWS also announced the general availability of Amazon Quantum Ledger Database, a fully managed service that it said “provides a high-performance, immutable, and cryptographically verifiable ledger for applications that need a central, trusted authority to provide a permanent and complete record of transactions across industries like retail, finance, manufacturing, insurance, and human resources.”

The general availability of G4 instances and AWS IQ were also announced. G4 instances is a new graphics processing unit (GPU)-powered Amazon Elastic Compute Cloud (Amazon EC2) instance that the company said was “designed to help accelerate machine learning inference and graphics intensive workloads.” AWS IQ is a new service that helps customers quickly find, engage, and hire AWS-Certified third-party experts for on-demand project work.

Also in Q3, AWS announced the opening of the AWS Middle East (Bahrain) Region; announced a 44% reduction in storage prices for Amazon Elastic File System (Amazon EFS) Infrequent Access (IA) storage class, “one of the largest percentage price reductions in AWS history”; announced collaborations in the U.S. between AWS Educate and statewide educational systems in Virginia, Texas, and Louisiana, in addition to a regional collaboration in the San Francisco Bay Area “to prepare the next generation for the cloud workforce”; and announced its first international AWS Educate Cloud Degree, it said.

On the Amazon Fire TV consumer electronics device front, Dave Fildes, director of investor relations, noted that the company recently introduced 20 new Fire TV products, including the first Fire TV Edition sound bar (Nebula) and the Fire TV Cube speaker.

“On the advertising side … we are continuing to see some increased adoption [and] one of our areas of focus is expanding” our video and over-the-top (OTT) offerings for brands, Fildes said. “It’s still early in this space, but we’ve done a few things with IMDb TV, live sports [and] things like adding more inventory through Fire TV apps,” he told analysts. It’s just “early days, but I think with the engagement of the device community… we’re really excited with the progress and improvements of these devices,” and Amazon sees “a lot of opportunity there,” he said.