There are two primary schools of thought regarding the success of cloud hosting giant Amazon Web Services (News - Alert) (AWS). There are the pundits that say AWS is in over its head and isn’t very profitable, and then there is the group of experts that claim the company could be extremely successful if it were to spin off into its own business. Now, it seems like the latter will be outweighing the former, after some shocking numbers were revealed in a recent analysis.

According to said analysis, the Internet retailer is on track to bring in $3.8 billion in revenue this fiscal year. In fact, Macquarie Capital analyst Ben Schachter goes as far as to argue that AWS is currently undervalued, and could reach would be worth $30 billion if it were a standalone company.

According to its research note, the Australia-based capital firm is estimating that AWS’ “current addressable market was $11 billion in 2012 and the unit delivered actual revenue of about $2 billion. In 2013, Schachter estimates that AWS will have revenue of $3.8 billion,” according to a recent related report.

Key points from the Macquarie report include:

• AWS is 100 percent gross margin business for Amazon. Amazon’s AWS costs run through its technology and content expense line. As AWS grows faster than Amazon’s retail business, the gross margin profile for the entire company changes.
• Storage growth for AWS’ S3 services is exponential and can carry growth for years.
• AWS is expected to have revenue of $3.8 billion in 2013, $6.2 billion in 2014 and $8.8 billion in 2015. In 2015, AWS will be 7 percent of Amazon’s revenue – significant, but not large enough for the retailer to be required to break out numbers in its financial reports.

Until now, AWS has relied on startups and small and medium-sized businesses (SMBs) for its growth; however, Macquarie predicts that “AWS is likely to land more large enterprises, a reality that is likely to boost growth.”

In related news, Datapipe (News - Alert) has been in the news for a number of reasons over recent months, accumulating an impressive number of accolades and titles to perfectly position it as a top contender in the cloud hosting space. Last month, the company added yet another honor to its list; AWS recently named the company a Premier Consulting Partner.

Among the 15 recipients – including Datapipe – of the Premier Consulting Partner designation for 2012/2013 were MarketShare, Razorfish, Aquilent and Citytech.

AWS also elaborated on the process of becoming an esteemed partner, saying, “In order to be considered for the Premier Consulting Partner designation, partners must first have achieved the status of Advanced Consulting Partner under APN. In selecting the recipients of this new designation, AWS used both quantitative and qualitative criteria. Selection of AWS Premier Consulting Partners is an annual process. The next application process for this designation will start in summer 2013.”

To learn more about Datapipe, visit www.datapipe.com.

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