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Amazon Web Services Worth $50 Billion By 2015, And That May Be Too Low

Amazon CEO Jeff Bezos

Amazon CEO Jeff Bezos

For a company that charges so little for its products and services, Amazon sure is worth a lot. Nowhere is this more true than in its Amazon Web Services (AWS) business unit. Despite dropping prices dozens of times over the past few years, one analyst is now projecting the value of the AWS business to top $50 billion by 2015, driven by success in its Marketplace.

At a mere 6X multiple on an estimated $8 billion in 2015 revenues, $50 billion may actually undervalue Amazon’s cloud business.

Selling Cloudy 1s And 0s

Other businesses command much higher revenue multiples than Evercore Partners gives AWS. Dropbox, for example, is seeking an $8 billion valuation, which represents a 34X multiple on 2012 revenues. And in Sillycon Valley, revenue-free Snapchat gets a 3,000,000,000X multiple.

And yet which of these can claim to be the future of enterprise computing, as AWS can?

AWS would almost certainly get a more bubble-esque valuation multiple if it operated more profitably. But as Amazon has done in retail, it generally favors pricing that gives it slim profits but a fat market share. It is pricing for future domination, in other words. So far this approach has ensured rapidly growing revenues, as

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