I’ve been analyzing Amazon’s 10Q and 10K filings. While Amazon does not break out AWS revenues – they’re part of the “other” segment – with a few judicious assumptions, a look at revenue growth, investments, and the deltas between North American and International service revenues, it is possible to size Amazon Web Services.
For 2012 AWS sales were on the order of $2 to $2.1 billion. For 2013 they are on track for sales of over $3 billion.
Assuming their current 50-60% annual growth rate continues â€“ and given the weakness of the competition and the TAM that appears likely â€“ total North American AWS sales could reach $10 billion in 2016. If 70% of their AWS sales are storage that would put their total storage sales – well, rentals – at $7 billion in 2016.
And if Europe picks up – thanks NSA! – they’ll be even bigger.
The tepid growth of traditional data storage companies means that will be enough to win second place in the storage sweepstakes.
AWS is part of the fastest growing segment of Amazon revenues. From 2010 through 2012 this segment had year-over-year percentage growth of 50%, 73%, and in 2012, 64%. In the first half of 2013 the segment saw growth of over 60%.
Go west young techie
Perhaps the most interesting number is the fact that the stock-based compensation for the technology and content segment is more than half of all stock-based compensation. Amazon is investing heavily in people.
The StorageMojo take
Several effects of such rapid growth:
1) Clearly, AWS is a major cause of the current anemic industry growth rate. Efficiencies due to NAND flash adoption are another major cause.
2) Object storage â€“ which AWS is based on â€“ is the fastest growing segment of the entire market.
3) The widespread acceptance of object storage â€“ even if most of the current users do not know what it is â€“ bodes well for companies bringing object storage to the enterprise.
4) The AWS replacement market – moving AWS-like services into the enterprise data center or a service provider’s colo – will pick up momentum over the next 3 years.
One fly in the ointment: NSA spying has damaged the credibility of US IaaS providers. AWS does almost nothing outside North America, but sustaining that high growth rate will require international adoption.
Hope the NSA mess doesn’t poison the well.
Courteous comments welcome, of course. OK, they aren’t actually selling storage. The rental model understates their actual impact on storage sales though.