Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Beginning in the first quarter of 2015, we changed our reportable segments to North America, International, and AWS. These segments reflect changes in the way the Company evaluates its business performance and manages its operations.

We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and content,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. In conjunction with creating a separate reportable segment for AWS, we have made other allocation changes among the North America and International segments to reflect the relative contribution provided to both segments. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. We exclude from our allocations the portions of these operating expense lines attributable to stock-based compensation. We do not allocate the line item “Other operating expense (income), net” to our segment operating results. There are no internal revenue transactions between our reportable segments.

North America

The North America segment consists primarily of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused websites such as www.amazon.com, www.amazon.ca, and www.amazon.com.mx. This segment includes export sales from these websites.

International

The International segment consists primarily of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused websites. This segment includes export sales from these internationally-focused websites (including export sales from these sites to customers in the U.S. and Canada), but excludes export sales from our North American websites.

AWS

The AWS segment consists of amounts earned from sales of compute, storage, database, and other AWS service offerings for start-ups, enterprises, government agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):

	Three Months Ended   March 31,
	2015			2014
North America
Net sales	$	13,406		$	10,808
Segment operating expenses (1)	12,889			10,518
Segment operating income (loss)	$	517		$	290
International
Net sales	$	7,745		$	7,883
Segment operating expenses (1)	7,821			7,916
Segment operating income (loss)	$	(76	)	$	(33	)
AWS
Net sales	$	1,566		$	1,050
Segment operating expenses (1)	1,301			805
Segment operating income (loss)	$	265		$	245
Consolidated
Net sales	$	22,717		$	19,741
Segment operating expenses (1)	22,011			19,239
Segment operating income (loss)	706			502
Stock-based compensation	(407		)	(321		)
Other operating income (expense), net	(44		)	(35		)
Income (loss) from operations	255			146
Total non-operating income (expense)	(234		)	(26		)
Provision for income taxes	(71		)	(73		)
Equity-method investment activity, net of tax	(7		)	61
Net income (loss)	$	(57	)	$	108

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(1) Excludes stock-based compensation and “Other operating expense (income), net” which are not allocated to segments.

We have aggregated our products and services into groups of similar product and services and provided the supplemental disclosure of net sales (in millions) below. We evaluate whether additional disclosure is appropriate when a product or service category begins to approach a significant level of net sales. For the periods presented no individual product or service represented more than 10% of net sales.

	Three Months Ended   March 31,
	2015		2014
Net Sales:
Media	$	5,289	$	5,467
Electronics and other general merchandise	15,628		13,017
AWS	1,566		1,050
Other (1)	234		207
Consolidated	$	22,717	$	19,741

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(1) Includes sales from non-retail activities, such as certain advertising services and our co-branded credit card agreements.