Amazon Web Services lands another $1 billion in deals
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Amazon Web Services lands another $1 billion in deals

Yesterday, we reported on Amazon Web Services’ position as a front runner in the race for the Pentagon’s $10 billion cloud-hosting project, JEDI. Now, we can report that Amazon has won another $1 billion in deals from existing clients SAP SE and Symantec Corp. An internal memo circulated within the company announced the news, and highlighted the division’s incredible growing momentum.

Amazon’s share price has risen by 56% so far this year

graph 1110 amazon

SOURCE: Yahoo Finance

The contracts are worth $500 million each, over the next five years. According to the memo, Amazon beat out Microsoft Corp. (the number 2 provider on the market) for the Symantec deal. To be clear, $1 billion is a huge amount of money, but it’s nothing unusual for Amazon Web Services (AWS) – that, in fact, might be the most newsworthy fact about it: the sheer scale of Amazon’s growth in cloud hosting.

Annually, the deals combined will offer a not-inconsiderable sum of $200 million. But for AWS, that’s a drop in the ocean that amounts to less-than 1% of annualised revenue. In the first six months of this year, Amazon reported that AWS logged sales of $11.5 billion. It’s also the undisputed leader by market share, of which it has 44.2%. The second largest player by market share is Microsoft at 7.1%. That’s a significant difference.

Both of these deals, if not bank-breaking by the ecommerce giant’s standards, represent expansions of existing contracts. That suggests that Amazon is managing to grow business with existing clients (both of which employ multiple cloud providers) at the expense of rivals.

Symantec’s chief information officer, Sheila Jordan, said: “We do not disclose details of the agreements underlying our relationships. As our cloud business has evolved, we have continuously evaluated our business relationships with our cloud partners.”

According to Amazon’s memo, AWS “has been able to capture more than 80%” of Symantec’s cloud spending, and its share of SAP’s “stays pretty stable at 70%.”

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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