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The Potential Consequences of Amazon’s Cloud Hiring Spree

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More rapid revenue growth

Amazon’s (AMZN) aggressive hiring of salespeople for Amazon Web Services (or AWS) may affect the business in several ways. Having more salespeople in the field to recruit new customers and upsell existing ones could support more rapid revenue growth in Amazon’s cloud division. AWS is one of Amazon’s fastest-growing businesses and is a profit machine.

AWS sales rose 42% to $4.1 billion in 2Q17. The unit grew faster than Amazon’s overall business, which posted 25% growth.

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Keeping AWS steady

Building a stronger sales force for AWS could also help Amazon stem the loss of cloud computing market share to competitors Microsoft (MSFT), Alphabet’s (GOOGL) Google, Oracle (ORCL), and IBM (IBM).

As the market leader and as shown in the chart above, AWS is in the crosshairs of its competitors, and it must continually reinvent itself to stay ahead of the pack. As a result, AWS has been adding more tools and services to its big-ticket cloud customers.

A hit to the bottom line

However, the aggressive hiring of cloud salespeople could put more pressure on the company’s bottom line in the near term. More salespeople would immediately drive up payroll expenses at a time when Amazon is already struggling with soaring operating costs.

Amazon’s operating expenses rose more than 28% to $37.3 billion in 2Q17, consuming much of the $38.0 billion overall revenues generated in the quarter. 

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