eBusiness Weekly
On Tuesday, Amazon briefly became the second publicly traded company after Apple to reach $1 trillion in market cap.
Although the stock closed below the magic number, it’s remarkable how quickly it joined the trillion-dollar club. It took Apple 38 years, while Amazon did it in just 21. Both companies got there by consistently improving their core products. But Amazon has also diversified its portfolio very quickly, dominating in areas ranging from online retail to cloud.
These days, it’s focusing on a handful of areas that could help drive its next phase of growth. Here are the ones we think are the most important:
AWS
Amazon’s cloud business, Amazon Web Services, has been the clear growth engine for Amazon in recent years. Now on pace to generate almost $25 billion in revenue over the next 12 months, AWS continues to be the backbone of Amazon’s expansion.
In its most recent quarter, AWS jumped 49 percent in sales, the third straight quarter of re-accelerating its growth, after seeing a slight slowdown last year. It also disclosed at least $16 billion in backlog revenue, an important sign that the company is signing bigger corporate clients with longer contracts.
More importantly, AWS is the most profitable unit of Amazon, accounting for 65 percent of the company’s total operating income. That profit margin gives Amazon the flexibility to invest in other areas — a key factor in Amazon’s quest for continued growth.
Health and pharmacy
The prescription drug market in the United States alone is estimated to be worth about $450 billion, so it’s no surprise that Amazon is eyeing it.
It made its first big move in June by buying up an online pharmacy start-up called PillPack for $1 billion, which will give it pharmaceutical licenses in almost every state once the deal closes. That sped up its process to get to market by years, and gave it an opportunity to generate billions in revenues by targeting those who pay cash for their meds before moving into the more complex insured market down the line. That ties in well with the company’s buy-up of Whole Foods, where it could add retail pharmacies for members who need their medicines quickly.
The company is also exploring a lot of other areas in health care, including selling supplies to doctors and hospitals, piloting its own health clinics for employees and rethinking medical records. In addition, it’s teamed up with Berkshire Hathaway and JPMorgan on a joint venture aimed at reducing health care costs and improving outcomes for employees.
