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All smiles for Amazon founder Jeff Bezos
All smiles for Amazon founder Jeff Bezos
Julie Bort

Amazon is notoriously tight-lipped about how much money it really makes on its cloud business, Amazon Web Services.

But it could be sitting on a unit that will generate nearly $4 billion of high-margin revenues this year, writes Macquarie Capital analyst Ben Schachter in a research note issued last week.

He believes that AWS will bring in $3.8 billion in revenue in 2013 and would be valued at a $19 billion company if were a stand-alone company.

And he, says, that's conservative, based on "our 2013 AWS revenue estimate." If he was aggressive enough to use an 8x multiple, AWS would be worth up to $30 billion, he writes.

Plus, AWS's gross margins are really high, he says because "Amazon runs all AWS costs, including employee/ operational and depreciation, through the Technology & Content expense line."

This meant that AWS contributed 190 points of overall gross margin to Amazon in 2011 and it will contribute more than 500 points by 2015, he says.

It all adds up to Amazon why he thinks Amazon's share price will hit $305 in the next 12 months. Amazon closed above $268 on Thursday.

But others wouldn't buy all of his analysis.

Amazon doesn't break out AWS revenue and margins in its financial reports. It lumps in AWS in its “other” revenue category. And another school of thought believes that Amazon sells its cloud services on razor thin margins, points out GigaOM's Barb Darrow.

We're pretty sure that Amazon is making at least a decent return for its effort with AWS, even if it's not the 500+ points of gross margin that Schachter envisions.

However, we're skeptical that enterprises will rush to Amazon more than other clouds available to them, from Google to Rackspace.

That's because, while Amazon is known for its cutting-edge cloud tech and low costs, it doesn't have a great reputation for reliability, a crucial consideration for an enterprise. All clouds go down at some point, but Amazon's outages are highly visible, such as the one that brought down Netflix on Christmas.

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Society

Gun Violence In America: Don't Blame The Victims — That Means Rappers Too

The recent shooting of Takeoff, a rapper, is another sad incident of gun crime in the U.S. But those blaming hip hop culture for contributing to gun violence ignore that rappers themselves are also victims. And the real point is that in today's America, nobody is safe from gun violence.

Gun Violence In America: Don't Blame The Victims — That Means Rappers Too

Fans wait outside State Farm Arena in Atlanta to attend the memorial service for Migos rapper Takeoff on Nov. 11

A.D. Carson

Add the name of Takeoff, a member of the popular rap trio Migos, to the ever-growing list of rappers, recent and past, tragically and violently killed.

The initial reaction to the shooting to death of Takeoff, born Kirsnick Ball, on Nov. 1, was to blame rap music and hip hop culture. People who engaged in this kind of scapegoating argue that the violence and despairing hopelessness in the music are the cause of so many rappers dying.

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