Amazon’s $52.9 billion of revenue in the second quarter of the year came in a tad below what Wall Street analysts expected — and that doesn’t matter whatsoever.
This is the Amazon everyone should have feared — and it has nothing to do with its retail business
The fast, profitable growth of the online commerce giant’s cloud computing and ad businesses should scare rivals.
That’s because the massive online retailer once again posted its largest quarterly profit in history — $2.5 billion for the quarter — on the back of two businesses that were afterthoughts just a few years ago: Amazon Web Services, its cloud computing unit, as well as its fast-growing advertising business.
An Amazon that is posting growing profits from its non-core business means an Amazon that can continue to keep prices low and invest in ever-speedier delivery times to widen its defensive moat in its main retail business. That should be a very scary realization for rivals.
Here’s another: Those two highly profitable businesses, AWS and the ad business, are showing little sign of slowing down. AWS revenue growth accelerated in the second quarter, rising 49 percent year over year.
And for the second quarter in a row, Amazon’s “other” business segment — which primarily consists of money it generates from selling ad space on its websites — rose well over 100 percent from the prior year, as well.
What is an Amazon competitor to do? Hope that the feeling of invincibility that Amazon sometimes exhibits throws it off track or stirs up real regulatory inquiries? Pray that outrage over its facial recognition tools and lack of diversity leads to internal tumult?
I wouldn’t count on any of it.
This article originally appeared on Recode.net.
See More:
