Amazing Amazon numbers: Its Web Services unit occupies 11 football fields’ worth of space, and every day adds enough server capacity to duplicate the Amazon of 2005. Also: Sex-shop chain gives up on IPO, and Seattle hikes business-license fees sharply for some.
The mass migration of data and computing power from privately owned data centers to those operated by Amazon.com, Microsoft and other competitors is one of the biggest business stories of our time. But sometimes the growth of the so-called “cloud” is hard to grasp.
Here’s one way to look at it: Every single day, Amazon’s cloud-computing business adds enough server capacity to support the data-storage and computing needs that the online tech giant had in 2005, when it had revenue of $8.5 billion. That’s about the revenue of a middling Fortune 500 company.
The figure comes from James Hamilton, a high-ranking tech guru at Amazon Web Services, Amazon’s cloud-computing unit. “This is a crazy number. Think what it means,” Hamilton told an audience of cloud enthusiasts and developers Tuesday at AWS’ re:Invent conference in Las Vegas.
It certainly means a lot of building or leasing of warehouses, shipping servers, consuming power and such. In other words, the cloud, esoteric as it seems, relies on a very brick-and-mortar reality that needs to be continually expanded, at a cost of billions.
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Another way of measuring it: As of December, AWS either rented or owned about 6.7 million square feet of space, or the equivalent of some 116 football fields.
To the extent one can read between the lines of Amazon’s earnings statements, it can also be measured in money. From 2010 to 2015, Amazon’s technology and content spending has expanded sevenfold, to $12.5 billion. (Amazon said in its annual report that infrastructure related to AWS has been a primary driver of spending in that segment.)
Then there’s the big truck. On Wednesday, amid thumping heavy-metal music, AWS hauled a trailerinto the cavernous meeting hall where re:Invent was being held. Its trailer carried what AWS calls a “snowmobile,” a shipping-container-sized device that can store an exabyte of data. That’s 1 billion gigabytes, equivalent to 31.25 million base iPhone 7s.
The point is to move the data physically from a company’s data center to Amazon’s cloud without hogging all of the world’s bandwidth.
All these physical trappings show the momentum the cloud has. For Amazon, it’s a business that will generate about $13 billion over a 12-month period, based on last quarter’s rate, and is obviously growing.
That’s why Andy Jassy, the CEO of AWS, says that over time the cloud business could top Amazon’s gigantic retail business in revenue.
— Ángel González: firstname.lastname@example.org
Business taxes, fees to rise in Seattle
Jeff Hause, owner of the Carsmart used-car dealership on Lake City Way, was surprised when he got a postcard in the mail earlier this month saying his city business-license fee would quadruple next year.
He had been paying $110 a year for a business-license tax certificate, which expires Dec. 31 and must be renewed annually.
His fee for 2017, the postcard said, would be going up to $480.
“This is a huge increase,” and one he hadn’t known was coming, said Hause. “It takes a lot of work to make $380 [the rough amount of the increase]. … I’ve got to sell another car.”
Though some businesses may be unaware of the increase, which starts next year, it’s part of a measure proposed by Seattle Mayor Ed Murray and passed by the City Council in Julyto help pay for more police.
The Council voted unanimously to increase its business-license fees on a tiered, revenue-based system.
For 2017, such fees range from $55 for businesses bringing in less than $20,000 a year in revenue, to $1,000 for those making $2 million or more in sales. By 2019, large businesses with revenue of $5 million or more will pay $2,400.
This year and last, small businesses making sales of less than $20,000 paid $55; those making more paid $110.
The City Council also voted unanimously to raise the city’s business and occupation tax rates by 3.2 percent over two years. Those rates have not grown since 1991.
Together, those increases are expected to generate more than half the $23 million the mayor has said is needed to hire more police officers, improve the city’s 911 call center and upgrade technology for the Police Department.
The Seattle Metropolitan Chamber of Commerce supported the increases.
— Janet I. Tu: email@example.com
Starbucks mug trips on Oregon falls
Starbucks could be in for a new coffee cup-related brouhaha after mislabeling a landmark on an Oregon-themed travel mug.
The Oregonian/OregonLive reports that the Seattle-based coffee chain has introduced a travel mug bearing sketches of notable Oregon landmarks, including Crater Lake National Park, food carts in Portland and Ashland’s Shakespeare Festival.
But there was also a waterfall design identified as “Klamath Falls” — and no such waterfall exists.
The simple line drawing of a falls topped by an arched bridge was likely meant to depict the majestic Multnomah Falls, a popular spot in the Columbia River Gorge.
Klamath Falls, of course, is a town in southern Oregon.
Starbucks apologized by email Thursday.
— Associated Press
Auburn chain drops IPO plan, faces debt
It may be time to give up on the hope that Auburn will have a publicly traded company specializing in adult intimacy.
Peekay Boutiques, a chain that operates 47 locations across six states under names like Lovers and A Touch of Romance, describes itself as “a specialty retailer at the forefront of the growing mainstream acceptance” of “sexual health and wellness” products. The Auburn-based company’s filings to the Securities and Exchange Commission report the stores carry 5,000 items “ranging from $1 condoms to $265 vibrators.”
The Texas private-equity guy who bought Peekay and several similar chains starting in late 2012 did so with heavy leverage, figuring that the debt — topping $50 million — could be paid off when the company completed an initial public offering of stock to outside investors.
But now, after two years of staving off its lenders, the company acknowledges that the much-delayed IPO isn’t going to happen.
Since mid-November it has withdrawn preliminary papers for the stock offering, ended its financial reporting to the SEC, shed some key executives and hired advisers to find a buyer or a way to restructure that massive debt.
Company executives did not respond to an interview request.
Although it added haltingly to its store count, grew revenue slowly to $41.4 million for 2015, and showed some improvement to its bottom line, Peekay has remained in the red due to the interest on its debt. Since February, when $38.2 million in senior secured debt matured, the company hasn’t found replacement financing.
The latest moves include terminating its marketing chief and receiving the resignation of its chief financial officer.
On Nov. 11 it hired two investment banking firms on a six-month contract to line up a sale or restructuring deal, and another firm to provide restructuring services.
Without a deal of some sort, a company filing says, “We may be forced to file for bankruptcy and/or liquidate our assets.”
— Rami Grunbaum: firstname.lastname@example.org