Market Overview

Amazon's AWS Outage Will Shed 2% Revenue: Here Is The Math Behind The Number

Share:
Amazon's AWS Outage Will Shed 2% Revenue: Here Is The Math Behind The Number

Trip Chowdhry of Global Equities Research commented earlier this week that Amazon.com, Inc. (NASDAQ: AMZN)'s AWS outage will have a 2-percent impact on the segment's first-quarter revenue.

Chowdhry followed up in a new report on Friday and explained the math behind his claim since it does seem like a large chunk of revenue for just five hours of outage.

The analyst explained that Amazon's AWS segment guarantees SLA's' (service level agreement) of 99.95 percent and offers a 10 percent service credit if SLA's fall below 99.95 percent.

Related Link: The Way Amazon Handled Its AWS System Outage: 'Bad Business'

The Math

February has 28 days (20 days excluding weekends), and the outage occurred at peak load times of around 8:30 a.m. until around 2:00 p.m. ET.

"Availability, considering 5 hours of downtime on 20 working days of February month = 475 hours/480 hours = 98.9 percent, which is less than 99.95 percent SLA requirement," Chowdhry explained. "AWS Revenues in February will be impacted by the following: 5 hours of downtime because of outage = about 1 percent of revenues for the month of February
Missing the SLA of 99.95 percent for February means giving out 10 percent as Service Credits."

Bottom line, many of AWS's customers that were affected include Apple Inc. (NASDAQ: AAPL), Adobe Systems Incorporated (NASDAQ: ADBE) and Netflix, Inc. (NASDAQ: NFLX) all have negotiated individual SLA penalties ranging from 10 percent and as high as 30 percent so the 2 percent quoted impact to Amazon's AWS revenue could prove to be a conservative assumption.

Image Credit: By Unknown - AWS, Public Domain, via Wikimedia Commons

Posted-In: Amazon AWS AWS Outage Global Equities Research Trip ChowdhryAnalyst Color News Tech Best of Benzinga

 

Related Articles (AAPL + ADBE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
VIACJP MorganReinstates50.0
NUVASVB LeerinkMaintains92.0
SRPTCantor FitzgeraldMaintains211.0
SRPTPiperJaffrayMaintains210.0
LULUGoldman SachsMaintains219.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Brave New Coin Is The Bloomberg Of Blockchain

The 'Disciplined Investor' Shorts Shake Shake Following 'Unimpressive' Earnings