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Amazon’s Cloud Price War With Google Is Starting to Hurt

Ken Wolter/Shutterstock.com

The numbers: Mixed, as always. Amazon sales grew in the double-digits for the 52nd quarter in a row. Revenue increased 23% year-over-year to $19.3 billion. Operating loss reached $15 million, down from a $79 million operating profit a year ago.

Amazon quarterly sales and growth chart Q2 2014

The takeaway: Customers are loving Amazon. Investors aren’t. Operating loss for the third quarter is forecast between $410 million and $810 million, compared to $25 million a year ago, as Amazon invests in a wide range of products from its poorly reviewed Fire phone to its original web video efforts and cloud platforms. Shares fell 10% in after-hours trading.

What’s interesting: Amazon Web Services, Amazon’s cloud-computing business, is now mature enough to affect Amazon’s overall numbers. Amazon made a big price cut in late March to counter aggressive pricing from Google, with service price declines up to 65%. Customers loved it, with usage increasing 90% year-over-year, Amazon said today on its earnings call. But revenue growth took a hit as a result.

Amazon doesn’t break out AWS revenue specifically, but it’s the largest part of Amazon’s “North America – Other” segment, where growth fell to 38% year-over-year after consistent percentage growth rates in the 50s and 60s over the past two years.

Amazon Web Services revenue chart Q2 2014

Reprinted with permission from Quartz. The original story can be found here

(Image via Ken Wolter/Shutterstock.com)

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