Build story · United States · 2003–2023
Amazon Web Services: selling the infrastructure behind the store
An internal effort to stop Amazon's teams rebuilding the same servers became the world's largest cloud business, earning about two-thirds of Amazon's operating profit.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- Launch
- S3 and EC2 in 2006
- Revenue (2014)
- about $4.6 billion
- Revenue (2023)
- about $91 billion
- Operating income (2023)
- about $25 billion
- Share of Amazon operating profit (2023)
- about two-thirds
What happened
In the early 2000s Amazon's engineers kept rebuilding the same computing, storage, and database building blocks for every project. Leaders, including Andy Jassy, realised that if they standardised these pieces into clean services for internal teams, outside developers might want them too.
Amazon launched Simple Storage Service (S3) in March 2006 and Elastic Compute Cloud (EC2) that August, charging by usage — cents per gigabyte or per server-hour — rather than selling hardware. Start-ups that would once have spent heavily on servers could now launch with a credit card. Established IT vendors largely dismissed it as a toy.
AWS kept cutting prices as it grew, adding hundreds of services. When Amazon first reported AWS separately in 2015, it surprised investors with its margins. By 2023 AWS earned about $91 billion in revenue and about $25 billion in operating income — roughly two-thirds of Amazon's total operating profit — and Jassy had become Amazon's CEO.
Timeline
- 2003
Leadership offsite identifies infrastructure as a core competence.
- 2006
S3 and EC2 launch with pay-as-you-go pricing.
- 2015
Amazon reports AWS results separately for the first time.
- 2021
AWS chief Andy Jassy becomes Amazon CEO.
what made it work
- Solved its own problem first, so the product was battle-tested at scale.
- Usage-based pricing removed the big upfront cost for customers.
- Moved years before incumbents took cloud seriously.
- Kept cutting prices, using scale to stay ahead.
the lesson
The capability you built to run your own business can be a bigger business than the one it supports.
Apply it to your business
- 1List the internal systems your team is good at — could others pay for them?
- 2Price so that customers can start small and grow with you.
- 3Incumbents often ignore new models that look too small at first.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.