Amazon Signals Cloud Price War
Amazon is banking on a range of price cuts to lure more customers to its AWS cloud computing business as 30,000 delegates arrive in the Vegas gambling mecca for its re:Invent conference.
AWS is expected to top US$12 billion in revenue this year, compared with $7.9 billion last year – and Amazon depends on heavily on the unit for profit and growth.
But the latest price cuts are making investors nervous as competition from Google and Microsoft gathers pace, and a third player, China’s Alibaba Cloud, moves into international markets, including Japan and Australia.
Prices for AWS data-storage services have been cut by more than 20 percent, while reductions in the company’s compute services range from 5 percent to 25 percent, depending on the type of service and geography.
Even so, Amazon’s operating income is expected to nearly double this year to $4.1 billion and surge another 79pc to $7.4 billion next year.