I cannot assess what would be realistic net margins for AWS.
Here is the beginning of my attempt to evaluate Amazon.
I would really appreciate your thoughts.
As per eMarketer, ecommerce should reach 10% of total retail worldwide sales in 2017 at $2.3T. They expect ecommerce to reach 14.5% of worldwide retail sales in 2020 to $4T. It is a 15% growth rate. If the growth rate decelerate to 12% from 2020 to 2027 we would reach $8T in ecommerce retail worldwide sales.
In 2016, net sales were as follow for Amazon:
North America $79,785 billion (Y/Y net sales growth 25%)
International $43,983 b (Y/Y net sales growth 24%)
AWS $12,219 b (Y/Y net sales growth 55%)
Retail consolidated sales (North America & International) were $123,768b. If growth decelerate to 20% for 2017 we would have consolidated sales of $148,521 billion or 6.5% of worldwide ecommerce retail sales.
If Amazon keeps a 6.5% of ecommerce worldwide retail sales we could have sales $520 billion by 2027 (6.5% of $8T) which would be a 13% growth rate. Big deceleration from the 2016 growth rate.
Gartner is predicting that the public cloud services market will grow 18% in 2017 to a total of $246.8 billion. Let’s assume that the public cloud services market can grow by 15% Y/Y until 2027. We would have almost a $1T market.
It is realistic to assume that AWS could reach $17 billion in sales for 2017. This would represent 7% of the worldwide public cloud services market.
If the cloud services market reach $1T by 2027 and AWS still represent 7% of this market, they could have $70 billion in revenues by then.
What would be realistic net margins for AWS?