Forget Alphabet and Apple, Amazon is the biggest winner in this season of Q1 results. As the leader in cloud services, the company’s result speaks volume.
Amazon declared the biggest Q1 result in its history. The company’s shares is climbing high up in the sky. How did Amazon get this result when tech giants such as Alphabet (Google) are missing their revenue estimates.
Here is it:
Amazon’s net profit rose from a loss of USD 57 million last year to USD 513 million. How did Amazon get it right within a year? It turns out that Amazon actually did some small tweaking to its core eCommerce strategy. Its Prime service for customers who pay USD 99 per month, did the company a lot of good. The strategy is working it has showed a great deal in its earnings.
Another major contributor to Amazon’s [AMZN:US] surging profit is sales from its cloud hosting and storage service called Amazon Web Services, AWS. The company’s profit from the AWS unit grew by +209.7% from USD 195 million in 2015 to USD 604 million in Q1 2016.
The success of AWS by Jeff Bezos has proven that taking small and nondescript bets can be very rewarding when properly managed. According to Statista, AWS currently holds about 27% of the cloud computing market. The platform has spread its focus into major lucrative parts of the cloud business.
Summarizing its performance, the company said:
“Amazon devices are the top selling products on Amazon, and customers purchased more than twice as many Fire tablets than first quarter last year. Earlier this week, the $39 Fire TV Stick became the first product ever — from any manufacturer — to pass 100,000 customer reviews, including over 62,000 5 star reviews, also more than any other product ever sold on Amazon. Echo too is off to an incredible start, and we can’t yet manage to keep it in stock despite all efforts. We’re building premium products at non-premium prices, and we’re thrilled so many customers are responding to our approach.
Moreover, Amazon will be looking at consolidating on its strength in the cloud side of things as well as increasing its innovation its prime services. This would include getting more subscribers for the service, pushing its Echo device a successful connected speaker.The next quarter will also see Amazon facing more competition in the cloud and content streaming. No space for complacency.