Amazon’s AWS Conundrum, The Edge Group Calls Bezos to Create Next-Level Growth from Corporate Spinoff
Nov 30, 2015
By Steve Nellis, Senior Writer, The Information: Amazon Web Services is by far the dominant cloud computing company, so far leaving rivals like Google and Microsoft in the dust. As it gets bigger, the question of whether it fits within Amazon.com is likely to loom larger.
Breaking apart Amazon would be complicated (get report), for various operational and financial reasons. It likely isn’t something Jeff Bezos has any inclination to do. A more plausible move might be for Amazon to sell a stake in AWS in a public offering, to both raise cash and focus investors on the value of the cloud computing unit. As Amazon Web Services grows, questions about whether it fits within Amazon are likely to intensify on Wall Street. But breaking the company up would be difficult for many reasons. The financials also highlight how much better AWS’ operating margins are compared with e-commerce—roughly 25% for cloud computing versus 3.5%. Jonathan Morgan, an analyst with Edge Consulting Group, which analyzes potential spinoffs, speculates an activist investor…