Geekzone: technology news, blogs, forums
Guest
Welcome Guest.
You haven't logged in yet. If you don't have an account you can register now.
Amazon, Apple: A tale of two tech giants
Posted on 29-Apr-2015 17:30 by Bill Bennett | Tags Filed under: News


Last week Amazon Web Services announced an operating profit of US$265 million for the quarter. It was the first time Amazon broke out the figures for its cloud business.

Meanwhile Apple turned in another record result with quarterly revenues of US$58 billion and earnings up 33 percent to US$13.6 billion.

Both companies did better than expected. The market thought AWS might be loss-making, perhaps break-even at best. Instead it is a US$5 billion a year business turning in a healthy margin.

Likewise Apple’s figure was well above analyst expectations.

What may have been overlooked is that Apple went past a 40 percent gross margin for the first time since 2012. That has a lot to do with the mix of products it sold including 61 million iPhones. Many of those iPhones were high-margin models with large amounts of storage.

Apple may not maintain that 40 percent gross margin, but it earns a better return from selling hardware than any rival. Pure software companies can get gross margins in the 80 to 90 percent range.

When cloud computing first appeared, analysts thought it could show similar high gross margins. It turns out selling cloud services is more like the non-Apple PC industry; a low-margin, high volume business.

That said, AWS managed a 13 percent operating margin, not high, but not shabby either. AWS occupies a special place in the cloud business. It’s the largest player and mainly sells cloud infrastructure.

The sweet spot for cloud service providers lies in the “will there be fries with that” options. IBM and Oracle want to play in the cloud market because being there gives them the option to sell high-margin software and services to customers.

This is what Amazon’s closest rival, Microsoft, does with its Azure cloud. By all accounts Microsoft’s cloud margins are not as good as AWS’s but they are improving.


Filed under: News Tagged: Amazon



comments powered by Disqus




Trending now »

Hot discussions in our forums right now:

The President Of The USA: Donald Trump
Created by TimA, last reply by tdgeek on 24-Feb-2017 19:41 (3298 replies)
Pages... 218 219 220


Mikrotik RB 3011 multiple port flapping (Title updated)
Created by RobBB, last reply by RunningMan on 22-Feb-2017 21:54 (57 replies)
Pages... 2 3 4


Vodafone / SKY merger
Created by wingbat45, last reply by compost on 24-Feb-2017 21:41 (135 replies)
Pages... 7 8 9


"Parents' lawsuit claims FaceTime caused daughter's death"
Created by kingdragonfly, last reply by richms on 23-Feb-2017 11:03 (23 replies)
Pages... 2


What is this green cabinet for?
Created by DarthKermit, last reply by MadEngineer on 24-Feb-2017 21:13 (20 replies)
Pages... 2


Android (FB) Messenger App Bugs/Issues
Created by TimA, last reply by tripp on 21-Feb-2017 19:45 (20 replies)
Pages... 2


I paid the wrong Bank Account, what can I do - advice wanted?
Created by harlansmart, last reply by PaulBags on 24-Feb-2017 23:32 (19 replies)
Pages... 2


SureSignal missed calls
Created by hairy1, last reply by froob on 23-Feb-2017 20:23 (19 replies)
Pages... 2