At least one Wall Street research firm was very happy with what transpired at AWS re:Invent this week. Amazon Web Services revenue could soar ten-fold between now and 2022 to more than $30 billion a year, according to projections by Morgan Stanley analyst Scott Devitt. In a research note, Devitt raised his stock price target from $380 per share to $404 per share.
From afterthought to big deal
Wow. We’ve come a long way from the days — not that long ago — when AWS was barely a consideration when it came to overall Amazon earnings. Earlier this week Amazon SVP Andy Jassy was asked how focused Amazon CEO Jeff Bezos (who did not speak this year) is with AWS said: “Jeff is very interested in the AWS business — it’s very possible that AWS could be the biggest business at Amazon.”
Jassy did not give a timeframe there, but if you track AWS sales numbers over its 7 year history — as much as they can be tracked given that they’re buried in a broader category — the trajectory has been up, up, up (see chart below.) Most pundits — including Gartner — put AWS in a class by itself in the cloud computing market with legacy IT players struggling to make headway
But back to Morgan Stanley. Devitt based his rosy predictions on what he sees as increased AWS traction in enterprise accounts. “After the first 2 days of the AWS re:Invent conference, we have increased conviction that AWS is still in the early innings of creating a meaningful public cloud ecosystem that will increasingly extend into large enterprises,” he wrote. He cited big data news in particular, noting that the Kinesis and Amazon RDS for Postgres releases will “allow enterprises to store, index and analyze data in many different forms with minimal friction and latency.”
Get a grip people
So everything’s coming up roses for AWS. But here’s where we should all take a breath and remember it’s very early in the cloud era and it’s by no means obvious (to me anyway) that all AWS forays into new arenas — desktop as a service (?) — are destined for greatness. And there are more competitors coming online all the time some of which focus their efforts finely to capture a defined piece of the market. Maybe one of these players will upset the AWS apple cart down the road.
After all, how many people thought even 5 years ago that an online book seller would create and then dominate this massive cloud IT market?