It’s no wonder so many startups are focusing on cloud software business solutions: Given the incredible success of Microsoft and Amazon’s cloud arm, it’s becoming one of the most popular niches out there. In late April 2015, Amazon released their cloud records and the profits are worth a double take. Their Amazon Web Services (AWS) has only been around since 2006 and was initially a smaller part of the e-tail giant, but quickly became one of the most lucrative parts of the company. Now, in just the past 12 months, AWS has brought in over $5.16 billion along with almost 50 percent growth in the past quarter alone. In three months, AWS has been responsible for $680 million, 13 percent of the total operating margin.
Gearing up for the announcement, Wall Street was buzzing with rumors that AWS would end up announcing a non-profitable season. There were even some “experts” who thought the numbers would be apocalyptic. Negative operating margins were expected, but when Amazon proved everyone wrong, a 14 percent share spike ensued on the day of the announcement—to a whopping $445.10 per share. The only thing Wall Street could do was to quiet down and respect Amazon’s prowess. Compared to last year, Amazon shares are up 43 percent and there’s no sign of them slowing down.
Don’t Call it a Comeback
Amazon has a history of rising from the ashes, famously not turning a profit for several years even though founder Jeff Bezos never gives up hope. Throughout 2014, the stocks were considered losers by investors. Instead, there was more attention being paid to other industry behemoths like Apple. In fact, last year Amazon experienced a 22 percent drop in total stock values, but the true Amazon supporters knew this was just a phase. After all, Amazon has been down before.
Now, AWS has been touted as a main reason for the revival of the company. Even though AWS makes up “just” seven percent of the company’s revenues, it’s clear that cloud services were the most lucrative of all (even with such a small slice of the pie). Cloud is responsible for 37 percent of Amazon’s 2014 profits, says analyst Colin Sebastian of Robert W. Baird’s agency. Plus, Amazon continues to invest in itself with financial and expert support solidly behind this part of the company. Simultaneously, another ten companies are reporting struggles to keep up with demands and trends.
A Not-So-Dark Horse in the Running
Microsoft is giving Amazon a run for its money thanks to Office 365 subscriptions soaring and Azure catching some eyes. For Microsoft, annual cloud sales were even better than Amazon when looking solely at the last twelve months. Boasting an impressive $6 billion in cloud sales alone, still it’s true that industry experts thought Microsoft would do even better. Nobody saw this one coming, but clearly there were a lot of wrong ideas when it came to cloud and cloud leaders altogether.
Needless to say, neither Amazon nor Microsoft have any explaining to do. Both companies helped the Nasdaq 100 Index creep up to an impressive 4,537 value with 55 of those points earmarked to Amazon and Microsoft. Cloud business services and solutions will continue to be a driving force in the tech industry, and these two companies are leading the pack—and leaving others in the dust. However, there are also some smaller companies and startups learning from the greats and combining customized service with incredible tools. Whether you prefer enterprise or boutique, there are cloud solutions for everyone.