Amazon Finds $1B Jackpot in its 100 Million+ IPv4 Address Stockpile
In a strategic move reflecting the escalating demand and costs associated with IPv4 addresses, Amazon Web Services (AWS) recently implemented a new pricing structure, charging customers $0.005 per public IPv4 address per hour. While seemingly modest, this adjustment is poised to become a lucrative revenue stream for Amazon’s cloud division.
IPv4 addresses, akin to digital real estate in the tech world, face scarcity due to the exponential growth of online presence and the finite nature of the 32-bit internet IDs. With demand outpacing supply, Amazon’s pricing shift aims to address both the soaring demand and administrative costs linked to IPv4 addresses.
Border0, in its analysis, estimated that Amazon currently controls nearly 132 million public IPv4 addresses. Based on the average IPv4 price of $35, this vast pool holds an estimated valuation of around $4.6 billion. Although Amazon cannot directly capitalize on this valuation, the company stands to generate substantial recurring revenue through its new pricing model.
Under the revised scheme, Border0 projects that approximately 30% of the IPv4 addresses controlled by Amazon (79 million) are associated with income-generating AWS services. This projection translates to an annual revenue of over $1 billion, showcasing the financial prowess of Amazon’s IPv4 address stockpile.
While some critics may view the pricing adjustments as contentious, it underscores the challenges and increasing costs associated with managing the finite pool of IPv4 addresses. Amazon’s move also reflects a broader industry shift, urging users towards IPv6 adoption, which boasts a vast 128-bit address pool.
IPv6, despite its advantages such as speed enhancements and improved security, faces slower adoption globally. The recent pricing adjustment by Amazon is expected to act as a catalyst, potentially steering users towards IPv6 adoption and paving the way for a more sustainable internet infrastructure, free from address shortages.
