Did you know the cloud platform industry is worth $180 billion globally, and AWS controls an estimated 32% of the market?
Since AWS is a giant in itself, it might make you wonder Is Amazon profitable without AWS?
Make sure you read this guide to find out the truth behind AWS and its contribution to Amazon’s net revenue and profit.
What is AWS?
AWS, or Amazon Web Services, is the most comprehensive cloud in the world that offers more than 200 fully featured services from data centers around the world.
Million of customers- right from government agencies like the U.S. and Canadian Federal Governments to small businesses to large enterprises like Netflix and Twitter are all using AWS to become more agile, reduce costs, and innovate faster.
AWS has way more features and services as compared to any other cloud provider, like artificial intelligence, the internet of things, machine learning, databases, storage, and whatnot.
Keep on reading to find out is Amazon profitable without AWS?
Is Amazon Profitable Without AWS?
People think of Amazon as an e-commerce business because it has become so ubiquitous with customers.
However, since 2006, AWS has been the biggest contributor in generating cash for other Amazon e-commerce and other projects adding to its success and profits.
The part that AWS plays in Amazon’s overall profitability can be seen in the company’s 2022 financial performance.
Amazon removed AWS in 2022 and was not profitable in that year, incurring $10.6 billion in operating losses.
Amazon wouldn’t be profitable without AWS.
The profit margin of Amazon as e-commerce is pretty low, often in single digits, in fact. And the company makes most of its profit from AWS along with International (INTL), North America (NA).
Just to give you an idea of how much AWS generates for Amazon, here’s a table showing the monthly payments made to AWS by its clients:
| AWS Customer | Monthly Payments ($M) |
|---|---|
| Netflix | $19 |
| $13 | |
| Twitch | $15 |
| $11 | |
| BBC | $9 |
| Turner Broadcasting | $10 |
| Baidu | $9 |
| ESPN | $8 |
| $7 | |
| Adobe | $8 |
((https://www.contino.io/insights/whos-using-aws))
Based on these figures, in 2020, AWS collected $1.3 billion just from these ten clients out of a million clients.
And according to Statista, the cloud platform industry is worth $180 billion globally, and AWS controls an estimated 32% of the market.
AWS Contribution in Amazon’s Profit
So far, Amazon’s growth has been remarkable, and the company has been growing consistently since its inception.
If we trace it back to 2004, Amazon generated $6.9 billion in revenue as compared to $514 billion in 2022 which shows massive growth.
Surely Amazon’s e-commerce and retail operations are driving profit; however, AWS has been the real cash cow for Amazon, so much so that in 2021, Amazon’s operating profit was $24.8 billion, $18.5 billion of which came from AWS contributing 74% of Amazon’s operating profit.
In reality, AWS, on average, contributes only 14% of Amazon’s revenue, but it is still a very important part of Amazon’s overall earnings and performance.
Have a look at AWS financials once:
| Year | AWS Operating Profit ($B) | Total Operating Profit ($B) | AWS % of Operating Profit | Revenue ($B) |
|---|---|---|---|---|
| 2021 | $18.5 | $24.8 | 74% | $469.8 |
| 2020 | $13.5 | $22.9 | 59% | $386.1 |
| 2019 | $9.2 | $14.5 | 63% | $280.5 |
| 2018 | $7.2 | $12.4 | 58% | $232.8 |
How Bright is the Future of AWS?
AWS has been the biggest contributor to Amazon’s revenue and profitability over the years now.
Rumours has it that AWS will surpass Amazon and will turn into an individual entity since it is so widely utilized.
One thing, however, is clear, with AWS’ staggering contribution, Amazon can be better described as a cloud company as opposed to an e-commerce company.
Amazon Revenue Breakdown
amazon Profit Breakdown
So as mentioned earlier, Amazon has three operating profit segments, namely: North America, International, and AWS.
As you can see from the chat above, AWS is the most profitable segment of Amazon, with a total operating profit of $23 Billion in 2022.
While the other two segments, North America and International, run at negative operating losses showing a net loss of $2 billion and $7.74 billion, respectively, in the year 2022.
Revenue of Amazon By Country
As you can see from the chart above, In 2022, Amazon made most of its revenue from the United States with $356 billion; second in the race was Germany with $33.6 billion, the UK with $30 billion, Japan with $24.4 billion, and $70 billion from the rest of the world.
Amazon Revenue Per Employee
Comparison with Other Businesses
Amazon Vs. ebay
In the year 2021, Amazon made $470 billion in revenue as compared to $10.4 billion made by eBay in the same year. Concluding from this, Amazon was 45 times bigger than eBay.
Wrap Up
Ever since its launch in 2006, Amazon Cloud Services has revolutionized the cloud industry surpassing the already existing cloud services offered by IBM, Oracle, Mircosoft, etc.
AWS changed the came completely by bringing in an array of features and services, so much so that today it holds almost half of the cloud software market globally.
And to those who were wondering if Amazon is profitable without AWS, the answer is that AWS contributes 14% towards Amazon’s net revenue, and even after combining Amazon Delivery Franchise, it won’t be making as much money as it is currently.
FAQ
Does Amazon earn more money from AWS or Amazon?
Amazon’s major contributors to its revenue are North America, AWS or International, and Amazon makes most of its money from AWS.
What makes Amazon so successful?
It’s no wonder Amazon is such a successful business thanks to its innovative business model that allows customers to buy products and books, utilize its cloud services, entertainment platforms, and more.
What is the profitability of Amazon in 2023?
Amazon generated over $10 billion in operating losses last year, but this year in the first quarter of 2023, it generated a revenue of $127.4 billion, showing an increase in profit by 9% compared to the previous year.
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.