While year-to-year growth for Amazon’s retail business ranged
from 13 percent to 20 percent from Q1 to Q3 2015, Amazon Web
Services—the retailer’s network of servers and data storage technology
—has grown 49 percent to 81 percent during that same interval. AWS
also grew into a significant portion of Amazon’s total operating
income, from 38 percent in Q1 2015 to 52 percent in Q3 2015.^60
Analysts predict that AWS could reach $16.2 billion in sales by the end
of 2017, making it worth $160 billion—more than the company’s retail
unit.^61 In other words, while the world still thinks of Amazon as a
retailer, it has quietly become a cloud company—the world’s biggest.
And Amazon isn’t stopping at web hosting. Amazon Media Group
alone will likely soon surpass Twitter’s 2016 revenue of $2.5 billion,^62
making it one of the largest online media properties.^63 Amazon Prime,
the most nonexclusive club in America (44 percent of U.S.
households^64 ), is offering, for $99/year, free two-day shipping, two-
hour shipping on select products (Amazon Now), and music and video
streaming, including original content.^65 Ideas for content are given the
budget for a pilot, and then viewers are asked to vote online for which
series get greenlighted.
Amazon, like any sovereign superpower, pursues a triad strategy:
air, land, and sea. Can you, Mr. Retailer, get your stuff to your
consumer in an hour? No problem. Amazon can do it for you (for a
fee), because it’s making the investment you can’t afford to make—
warehouses run by robots near city centers, thousands of trucks, and
dedicated cargo planes. Each day, four Boeing 767 cargo planes carry
goods from Tracy, California, via an airport in nearby Stockton that
was half the size three years ago, to a 1-million-square-foot warehouse
that didn’t even exist until last year.^66
In early 2016, Amazon was given a license by the Federal Maritime
Commission to implement ocean freight services as an Ocean
Transportation Intermediary. So, Amazon can now ship others’ goods.
This new service, dubbed Fulfillment by Amazon (FBA), won’t do
much directly for individual consumers. But it will allow Amazon’s
Chinese partners to more easily and cost-effectively get their products
across the Pacific in containers. Want to bet how long it will take
Amazon to dominate the oceanic transport business?^67