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Comment by ecshafer | Hacker News Reader

The margins on tech/cloud are just so astronomically higher than retail. Places like Walmart or Costco are fighting for <5% profit margins, IIRC its closer to 2%. Quick search says AWS has about a 35% profit margin and about 50-60% of the operating profit of amazon but 17% of the Revenue. With those numbers it makes sense to focus on AWS.

IMO AWS should be spun out as a separate company.

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This makes me wonder if Amazon the retailer requires having access to AWS services “at cost” in order to be profitable. If AWS was spun out completely, would Amazon proper be able to afford their AWS bill of AWS had a profit margin on it.

I’m sure Amazon.com would be fine, but it would take a chunk out of their margins. I’m also sure that their X% ownership of the spun out AWS would cover the difference.

Consider the reverse. If AWS didn't have a large guaranteed customer in the form of Amazon, would they still be able to develop their products with perfect knowledge of the needs?

If AWS becomes a separate business now, they may be able to build better products, given a bit less focus on one large customer (Idk if Amazon.com has any priority in their product roadmaps now)

I don't have the answer but this question has an answer, as Amazon's earning reports are public.

It doesn’t help that now other potential growth markets for AWS, like the EU, now are getting pushed to have more and more data sovereignty due to the administrations antipathy towards allies. Musk can whine all he wants about the EU, but that’s like complaining about customers that don’t want to buy your products instead of building a good product they trust and want to buy.

If they were separate businesses it would make no sense to merge them. It would be like Microsoft buying Walmart.

Don't give them ideas.

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