Amazon's massive cloud business hit over $12 billion in revenue and $3 billion in profit in 2016
And, although Amazon missed its overall projected revenue number for the quarter, AWS finished the year by blowing by those initial expectations: coming in at $12.2 billion, with $3.1 billion in operating income profit.Amazon's closest competitor, Microsoft, doesn't report the revenue it brings in from its comparable cloud, Azure. Even so, Microsoft said last week when it reported its fiscal Q2 that "commercial cloud annualized revenue run rate exceeds $14 billion."
Amazon's growing dominance in cloud is meaningful for a couple of reasons. As Amazon grows, it's putting pressure on classic IT hardware and software providers. As companies use Amazon for more of their data center needs, they don't buy as many servers, networks and storage as they used to. And Amazon builds much of its own infrastructure, doesn't buy it from the classic vendors.At the same time, Amazon has gone on the warpath with some of the biggest vendors out there, namely Oracle. As companies move into Amazon's data centers, they are more likely to buy one of Amazon's home grown databases instead of Oracle. In fact, Amazon says that in 2016 its cloud customers migrated more than 18,000 databases from other vendors (including, but not exclusively, Oracle) using a tool it developed to make it easier for companies to move their databases.
AWS seems like an unstoppable success now, and so we expect to see more fireworks between Amazon and classic IT vendors like Oracle as 2017 continues.Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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