Amazon Web Services stays on top despite obstacles
October 31, 2014
Much has been made of Amazon's recent struggles, particularly regarding its stock prices. Pundits and analysts have started turning against the web giant, questioning CEO Jeff Bezos' leadership and his ability to generate returns for his investors.
InfoWorld reported that Amazon sustained a $544 million operating loss for its third quarter ending on September 30. Throughout the years, Bezos has never been shy about his willingness to forgo profits for the sake of growing the business. This may have attracted investors in the early days, but it seems shareholders are starting to grow weary of Bezos' determination to keep expanding Amazon's business. Accordingly, Amazon.com's share price plummeted by 8.3 percent this week.
What does this mean for AWS?
Amazon's recent financial struggles have led some to wonder if the tech titan will continue to invest in Amazon Web Services. InfoWorld posed the dilemma like this: can Amazon continue to invest in itself at the expense of profitability? On the other hand, can it afford to stop investing with Microsoft and Google making a hard push to take over the top spot in the cloud computing for the enterprise market?
AWS thrives despite company losses, new entrants to the market
Amazon's decision to keep investing in AWS despite its flagging stock prices may be what keeps the company going. Even though cloud computing services have proliferated wildly, with noted industry giants entering the competition, AWS still has the distinct advantage of being one of the earliest entrants to the market. As InfoWorld wrote, Amazon's greatest hope for its future value growth is in AWS.
A report by Forbes may validate Amazon's choice to keep investing in its enterprise cloud services. According to the news source, data from cloud vendor Skyhigh Networks found that cloud service adoption grew across all industries and the average number of cloud services in use by a company resumed its growth after pausing in Q2, increasing from 738 to 831 services.
And despite all of the internal and external tumult, Amazon Web Services remained the number one enterprise cloud computing service in Q3 2014, beating out surging competitors like Salesforce, Microsoft and Google.
InfoWorld concluded that stock performance shouldn't be the end-all-be-all when judging a company's decision or overall health. The stock market can be short-sighted and in this case, doesn't seem to reflect the long term potential of AWS.