Amazon Web Services continue to tear it up

Amazon Web Services

It looks like the relentless march of Amazon Web Services continued in the company’s third quarter. Net sales of “other” services — the umbrella category that includes AWS results — hit $960 million for the quarter ending September 30, 2013. That’s up nearly 58 percent from $608 million a year ago and nearly 14 percent sequentially from $844 million in the second quarter.

So here’s how AWS sales (or other sales) look from its inception in 2006 till now:

awsq3sales2013

Amazon touted continued AWS traction in its earnings release, claiming that more than 2,400 educational institutions and 600 government agencies are customers. It cited the U.S. Federal Drug Administration as one example. A federal court recently upheld the CIA’s decision to use AWS despite a lower competitive bid from IBM.

Update: Amazon CFO Tom Szkutak was enthusiastic about AWS on the earnings call Thursday night AWS is “growing very very, strong… what you have seen is a really nice steady acceleration of growth since Q4 last year.” (Seeking Alpha has the full transcript).

The usual AWS caveats apply here. This category also includes sales from “non-retail activities, such as AWS in the North America segment, advertising services, and  co-branded credit card agreements” although it’s generally accepted that AWS accounts for the bulk of the aggregate number.

Technology Business Research estimated that 84 percent of the overall category, or $850 million, comes from AWS, which works out to be 136 percent growth year over year.

The firm expects also AWS revenue for the fourth quarter to come in over $1 billion (up 145 percent year over year).

While Amazon never talks about profitability  the perception that AWS is a loss leader has evolved. Most experts now acknowledge that Amazon makes money on these services. The question is: how much?

Note: This post was updated October 24, 2013 2:37 p.m. PDT with TBR analysis and again October 25 at 8:02 a.m. PDT with Amazon CFO comments.

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