Amazon owns a massive online retail business, but a large part of its revenue also comes from Amazon Web Services (AWS), its web-hosting and cloud infrastructure unit.
The investment banking firm Jeffries estimates AWS had $US5 billion in annual revenue with a 36% EBIDTA margin, according to Fortune’s Adam Lashinsky.
On Tuesday, AWS SVP Andy Jassy went on stage at the Fortune Brainstorm Tech 2014 to shed some more details of the business.
Jassy said AWS currently has “hundreds of thousands” of customers in over 190 countries, including some of the hottest startups like Dropbox, Pinterest, and Airbnb.
They have been expanding to large enterprises and the public sector, too, lately, as they now have over 800 government agencies and more than 3,000 academic institutions using their service worldwide. Last year, for example, AWS snagged a $US600 million deal from the CIA to help build their “private cloud” solution.
While Jassy declined to comment on the actual finances of AWS, he shared the customer-centric approach it takes when setting the prices. “We’ve decreased our prices on 44 different occasions over the last six to seven years,” Jassy said. “It’s primarily because the way we think of all our businesses at Amazon is that everything starts with the customer and then moves backward from there.”
In fact, he said “lots and lots of bills” are less than a dollar a month. His main challenge isn’t about lowering prices but figuring out how to maintain it. “It’s actually not that hard to lower prices, but it’s hard to be able to afford to lower prices,” he said.
Yet, he sounded optimistic when asked about future price cuts. “I think you can expect more price cuts over the long term.”
Amazon doesn’t disclose revenue for AWS separately, mainly because the SEC doesn’t require it to. Instead, its numbers are included in the “Other” category of the earnings report, which grew 58% to $US1.26 billion last quarter.
Here’s the full interview:
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.