Every tech blog on the planet is currently losing its mind over the Apple Watch, which people started actually picking up on Friday (well, more like people are refreshing UPS tracking pages, since most preorders won't ship for weeks yet). I'm not touching that today. Everyone else already has, and by the time you're reading this there will be another forty posts about band swapping and battery anecdotes. I want to talk about something that happened three days before that, which I think matters a lot more long term even though it got completely buried under all the Watch noise: Amazon told us, for the first time ever, what AWS actually makes.
Thursday's earnings call. Amazon broke out Amazon Web Services as its own line item for the first time in the company's history. The number: $1.57 billion in revenue for the quarter, with operating profit of $265 million. Read that twice. Amazon's cloud division, on its own, made more operating profit than the rest of the entire company combined (Amazon's retail business is famously running on razor-thin margins, when it's not running at a loss outright). Wall Street noticed immediately. The stock jumped something like 14% the next trading day, which for a company Amazon's size is an absurd amount of market cap to add in 24 hours.
I've had a little EC2 box running since 2012, a t1.micro that hosts a Rails app basically nobody uses anymore plus a cron job that used to ping me when my apartment's smart thermostat dropped offline (RIP, long story, dont ask). I always figured AWS was a nice side hustle for Amazon, the kind of thing that pads margins a bit but isnt really the point of the company. Turns out it might BE the point, or close to it. Bezos has apparently spent years quietly building the backbone of a huge chunk of the internet while everyone else was busy writing articles about drone delivery.
Whats wild is how long they kept this hidden. AWS launched in 2006. Thats nine years of "trust us, its fine" without ever showing actual numbers, while startups and increasingly huge companies (Netflix being the obvious one, running basically their whole streaming stack on it) kept dumping more infrastructure onto the platform. Now we know it wasnt just fine, it's the most profitable part of the business by a wide margin, and every other cloud provider chasing them, Google, Microsoft's Azure, even the little guys like Linode and DigitalOcean that I actually use for stuff, is racing after a company that had years of head start and, we now know, has been minting money the whole time.
Small tangent because I cant help myself: I still think EC2 pricing is a nightmare to reason about if youre just a hobbyist. I spent an actual hour last month trying to figure out whether a reserved instance made sense for my dumb little project before giving up and leaving it on-demand. DigitalOcean's flat $5 a month droplet pricing exists specifically because AWS pricing makes normal humans want to throw their laptop across the room. This earnings reveal doesnt change that, and I doubt it ever will, but its funny that a company can be this profitable while also being this confusing to actually use unless you've got a procurement team doing the math for you.
Worth a mention too, even though its not really connected: GitHub has been fending off that huge DDoS attack for weeks now, the one researchers are calling the "Great Cannon," reportedly traced to hijacked traffic routed out of China and aimed at anti-censorship repos. Its been going on since late March and GitHub has kept the lights on through the whole thing, which is its own kind of infrastructure flex, just a much less profitable one than Amazon's.
Watch launch, sure, fine, big day for Apple, I get why its everywhere this week. But my guess is that five years from now people point back at Thursday's earnings call as the moment it became obvious what Amazon actually is. Not a bookstore. Not even really a retailer at this point, whatever the quarterly numbers still say. A utility company that happens to also sell you paper towels and phone chargers on the side.