Most of the inherent value in Amazon's market capitalization comes from cloud computing.
Cloud computing has the tendency to become modern day computing.
The US online merchandising business of Amazon is only mildly profitable, while Amazon’s international internet trading business is loss making.
So from here follows that most of the market capitalisation of Amazon comes from the cloud computing business which regularly reports net profit margin of above 20 %.
Lately Amazon has become the number three global player in internet advertising, which also accrues huge value to Amazon.
Amazon’s AWS service offering is disrupting computing with 32 % market share in cloud computing and thus changes many other new businesses.
Amazon’s AWS tailor made strategy seems a viable ‘pay as you go’ service breakthrough, which will continue to create value for Amazon.
Amazon has to target more small and medium enterprises for which the pay as you go cloud computing models seems a neat fit.
All in all, Amazon with AWS cloud computing is on the cusp of innovation.
Many even mid-sized or large capitalization technology companies like Spotify, Snap Inc, the maker of Snaphat are using cloud computing, which shows cloud computing is really capable of executing large projects and complex tasks.
Amazon with 32 %, Microsoft with 19 % and Alphabet owner of Google Cloud with 10 % market share are the front-runners in cloud computing, together holding more than 60 % of the cloud computing market.
Amazon AWS advantage is that AWS is the first developed cloud computing suite offered on the market. In the words of Jeff Bezos himself: 'we just put together some things, like API we were working on and had done and thus Amazon cloud was born'. Amazon's intuitive approach to cloud computing allowed the company to be close to AWS users and adapt its offering accordingly.
Amazon AWS' tailor made approach is resonating very well among customers who are really pleased by the ability to save on costs and scale quickly.
In short, Amazon AWS is the (cloud) computing leader to catch nowadays and with Amazon's brilliant cloud computing strategy up until now, this is easier said, than done.
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