Amazon Web Services Expected To Hit $1.5 Billion In Revenues For 2012

Amazon Web Services (AWS) is expected to earn $1.5 billion in revenues this year, but overall the organization still remains under-appreciated as a core asset of But that may change this week as AWS holds its first conference in Las Vegas. The event should give more attention to an organization that has had arguably the deepest impact on IT and the enterprise software market.

According to Investor’s Business Daily (IBD), the estimated revenues come from a report by Analyst Colin Sebastian of R.W. Baird, who also highlighted the challenge that AWS faces with deeper competition from Google and Rackspace.

According to IBD, Sebastian said Amazon doesn’t break out sales of AWS but the cloud computing group is “widely believed to be the biggest contributor to the online retailer’s “other” operating segments listed in financial statements.” In the third quarter of this year, Amazon reported “68% sales growth for those businesses, to $648 million, far outpacing its overall revenue growth of 27%.”

In his report, Sebastian also said that AWS may be overlooked in helping improve Amazon’s always-thin margins for its retail products, which again shows the value the group has to the overall organization.

AWS is the undisputed leader in cloud computing but often you would never know it, considering the group’s relatively low profile. But it has created enough disruption in the market that now IT shops all over the world are thinking twice about their investments in their own data centers and on-premise application portfolios. That has forced the giants vendors of the enterprise to develop their own cloud strategies that range from OpenStack to more vertically oriented approaches from the likes of Oracle, which is banking on a big box approach to the cloud.

AWS allow customers to deploy apps with speed and manage them in large volumes with automated approaches that give great flexibility when done right. Doing it right is the big challenge for customers. That’s the other thing to consider this week at re:Invent. It’s a coming out party but it’s also a chance for the community to learn from each other about how to deploy and manage apps on the AWS infrastructure. That knowledge is still in the hands of relatively few people. If that does not change, it will give competitors ample opportunity to cater to IT with deep customer support and broad customized service level agreements.