Why Amazon's AWS Cloud Business Will Continue to Grow

NEWS ANALYSIS: AWS is now the single most profitable business unit within Amazon, and it's likely to only grow in the months ahead, thanks in part to a number of key factors that are working in the company's favor.

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For a company that started off with the simple business of selling books online, Amazon has sure come a long way. While consumer goods, including books, are at the core of Amazon's business, it is the Amazon Web Services (AWS) cloud division that generated most of company's operating income in 2018.

Amazon reported its full fiscal 2018 financial earnings on Jan. 31, with AWS revenue for the year reported at $25.7 billion, growing at 47 percent year over year. Even more impressive though is that operating income from the AWS division at $7.296 billion was higher than another other division within Amazon. Simply put, Amazon is now making more profit from the cloud than it is for any other business unit it operates. That's a staggering achievement given the overall size and scale of Amazon and is a testament to the transformative power of the cloud, not just for Amazon but for IT in general.

The cloud as it exists at AWS today is not the same as it was when Amazon first pioneered the concept in 2006. The original idea of AWS was to provide elastic services for virtual servers with the Elastic Compute Cloud (EC2), in an effort to make it more efficient for organizations to deploy and run workloads with no capital expenditures. Now in 2019, AWS is much more than just simple elastic services for virtual servers.

So where is AWS growing? There are a number of different areas and an overall relentless pursuit of innovation that lead to a dizzying array of services.

Data Point #1: AWS Is Still Growing EC2

Certainly, there is money to be made in the elastic server EC2 business as AWS continuously expands its offerings in that segment. EC2 is at the heart of what AWS is for many cloud users, providing different instance types for various workload requirements.

Over the course of 2018, AWS announced six new instance types, including the A1 instance types that use custom AWS Graviton Arm processors. Other new instance types include the C5n network-optimized instances, which provide 100G-bps network bandwidth, and the P3dn GPU instances for distributed machine learning and high-performance computing applications. 

By continuing to expand the available pool of EC2 instance types, AWS is making it easier for organizations of all sizes to choose cloud deployment as a primary option.

Data Point #2: AWS Is Going On-Premises

Looking into 2019, the AWS Outposts service, which brings the AWS service to on-premises data centers, will further help the company to grow. With AWS Outposts, organizations get the benefits of cloud compute infrastructure, but it's all running on-premises.

For those organizations that have seen deployment in a public cloud, or in a data center they don't control as a barrier, the AWS Outposts service will provide an option.

Data Point #3: Container Services Including EKS and Fargate Provide Options

Containers are an increasingly popular way for organizations to run application workloads, which is something that AWS knows well. Organizations have used EC2 to deploy containers and the Kubernetes container orchestration system, but there are other options.

The Elastic Container Service (ECS) provides container registry and deployment capabilities, while EKS, the Amazon Elastic Container Service for Kubernetes, provides an optimized Kubernetes service. Going a step further, the AWS Fargate service provides a different way to run containers in a more lightweight approach than other options.

As organizations continue to look at containers as a way to develop and deploy workloads, AWS will undoubtably attack a fair share.

Data Point #4: Serverless Is Growing

The concept of elastic cloud computing isn't the only concept that AWS has pioneered. With AWS Lambda, the company has helped to create the emerging concept of serverless computing, often also referred to as functions-as-a-service. With Lambda and its myriad services, organizations do not need to run virtual servers or EC2 instances to get functionality. Instead, with Lambda, specific event-driven triggers are configured, enabling functions to only run as needed.

With Lambda, there can be significant cost and operational efficiencies, since organizations only pay for events, rather than time for a long-running server that is always on. The concept of serverless has become increasingly attractive to organizations and will also help propel AWS to future growth.

Data Point #5: Sagemaker Enables Humans to Benefit from Machine Learning

Artificial intelligence (AI) and machine learning (ML) are oft repeated buzzwords, but they haven't always been the easiest types of technologies to actually deploy. The AWS Sagemaker service aims to democratize the AI/ML experience, making it easier to get up and running with the technology to rapidly benefit from it.

As organizations look to figure out what AI/ML is all about and how it will benefit their organizations, AWS Sagemaker is likely to be among the primary choices.

Data Point #6: More Regions, Means More Availability

With the cloud, it's important for organizations to have access to resources that are local, both for performance and regulatory reasons. 

AWS has grown its data center footprint and now has 20 infrastructure regions globally. Across those regions, AWS now has 60 availability zones. Looking forward, AWS plans to add four new regions inside of the first half of 2020, with Bahrain, Hong Kong SAR, Italy and South Africa.

Simply put, more regions mean more opportunities for organizations to give AWS their business.

Data Point #7: Multicloud Is an Opportunity for Growth

When AWS got started in 2006, there were no other clouds, but that's no longer true. The two other major public cloud vendors, Microsoft with Azure and Google with its Google Cloud Platform (GCP), are also growing, as demand for cloud is robust.

Over the past year, the concept of multicloud has emerged, enabling organizations to run and manage workloads across multiple public clouds. It's a trend that is intended to help prevent vendor lock-in, and it can also be a big benefit for AWS.

While AWS has had great success on its own, the push by the other cloud vendors brings more organizations and workloads to the cloud. As organizations deploy cloud workloads, the need to prevent lock-in and maintain the highest levels of availability will lead to multicloud deployment, and with that AWS will also grow. For AWS, more cloud adoption overall means more opportunities, and that will be likely be a key driver of growth for the company in 2019 and beyond.

Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.