Why Amazon's Impressive Cloud Computing Profits Could Slip
Amazon (NASDAQ: AMZN) struck gold with its cloud computing arm, Amazon Web Services. AWS accounts for around one-third of global cloud infrastructure spending, and it's far more profitable than the company's e-commerce business. Through the first nine months of 2022, AWS generated $58.7 billion of revenue and $17.6 billion of operating income, good for a segment operating margin of 30%.
How does AWS generate such incredible profits? One reason is that customers don't pay much attention to their cloud computing bills. Flexera estimates that roughly 32% of all cloud spending from organizations is completely wasted. That waste comes from idle resources, resources that organizations have lost track of, and the over-provisioning of resources.
On top of waste, many companies likely have room to optimize their cloud computing spending. A start-up trying to get to market quickly during a period of booming demand, for example, isn't going to spend much time worrying about cloud computing costs. That start-up might write inefficient code that uses more resources or bandwidth than would otherwise be necessary for the sake of expediency, or it might use expensive services that it can get up and running quickly.
Source Fool.com
