In 2006, the company launched Amazon Web Services (AWS). Amazon had first become interested in developer support in July 2002, when it released product data to its third-party affiliates, who responded very positively. In 2003, Andy Jassy (Harvard Business School MBA, 1997) was tapped to begin developing a business plan for what would become AWS. In March 2006, AWS was officially launched with one product, Simple Storage Service (S3). S3 allowed users to store and retrieve data for around $0.12 to $0.15 per gigabyte per month. In August, AWS released the Elastic Compute Cloud (EC2), a service that allowed developers to run on Amazon’s computing environment. This allowed websites to use Amazon’s server and computing space on an as-needed basis for a much lower price than was traditionally available. Other parts of AWS included Simple DB (database storage), Simple Queue Service, Amazon Flexible Payment Service, Amazon Premium Support, and Amazon Elastic Block Store.
AWS added hundreds of new service features every year and cut prices aggressively—51 times in the first 10 years of operation. In recognition of its larger role in the portfolio, in 2015 Amazon started publishing separate financials for AWS. Revenues grew rapidly, reaching $25.7 billion in 2018 (11.0% of total sales, up from 9.8% in 2017). More than half of Amazon’s operating profit ($12.4 billion) came from AWS ($7.3 billion). By one estimate, Amazon owned more than one third of the world’s cloud storage business.133 Major competitors in this sector were Microsoft, Google, IBM, and Alibaba.
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