AWS on track to be bigger than IBM by Christmas, once Kyndryl is spun out

Amazon.com recorded $108.5bn in sales for the first quarter of its 2021 financial year, $13.5bn of which came from its Amazon Web Services (AWS) operation.

AWS generated $10.2bn of revenue in Q1 2020, so we're looking at a 32 per cent year-on-year revenue jump.

On the company’s earnings call on Thursday, Amazon CFO Brian Olsavsky pointed out that in Q1 of 2019, AWS had a $31bn annual revenue run rate, a figure that grew to $41bn in 2020. Amazon now expects AWS to deliver $54bn of annual revenue in FY 2021.

By way of contrast, IBM’s full-year 2020 revenue was $73.6bn, but by the end of 2021, Big Blue plans to have spun out its Kyndryl services unit and for it to have annual revenues of $19bn. IBM and Kyndryl both have declining revenue. AWS is growing at 32 per cent a year.

So on the day Kyndryl leaves IBM, AWS will almost certainly be bigger than Big Blue when measured by annual revenue. And even if IBM kept its services arm, AWS would be on track to overhaul it in a year or two.

No pressure on Red Hat, then.

Olsavsky attributed AWS’ speedy growth to COVID-19 accelerating cloud adoption across all industries and users of all sizes. Investor relations director Brent Fildes chipped in the figure of $52.9bn – the backlog of commitments to AWS for which customers are yet to pay.

AWS delivered operating income for the quarter of $4.16bn, a sizable chunk of Amazon’s $8.9bn total. Net income reached $8.1bn.

The news wasn’t all stellar for AWS, as year-on-year sales growth dropped from 33 per cent in Q1 2020 to 32 per cent in 2021. Cloud’s contribution to all Amazon sales also dropped a point, from 14 per cent to 13 per cent.

May we all have to endure such disappointments.

Other items that caught The Register’s eye in the quarterly announcement [PDF] include:

• The Amazon Prime membership service now has over 200 million subscribers, 75 per cent of whom have used the Amazon Prime video streaming service and sent its streaming hours soaring over 70 per cent year-on-year;
• Amazon has fitted AI-driven driver safety kit on its delivery vehicles, and pilots of the tech in 2020 saw crashes reduced by 48 per cent, stop sign violations down twenty per cent, and distracted driving down by 45 per cent;
• Expansion for “Amazon Scout” a fully electric autonomous delivery system that sends a device the size of “a small cooler on wheels” rolling down US sidewalks.

While AWS is closing in on IBM's revenue, it still trails the likes of business-focused peers Microsoft, Dell and Intel, but if it lands $54bn annual revenue will leapfrog Lenovo. ®