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Segment Information
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Segment Information
SEGMENT INFORMATION
We have organized our operations into three segments: North America, International, and AWS. 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. 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. In Q1 2017, we combined stock-based compensation and “Other operating expense, net” with operating expenses in our presentation of segment results. There are no internal revenue transactions between our reportable segments. These segments reflect the way our chief operating decision maker evaluates the Company’s business performance and manages its operations.
North America
The North America segment primarily consists 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 primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused websites such as www.amazon.com.au, www.amazon.com.br, www.amazon.cn, www.amazon.fr, www.amazon.de, www.amazon.in, www.amazon.it, www.amazon.co.jp, www.amazon.nl, www.amazon.es, and www.amazon.co.uk. This segment includes export sales from these internationally-focused websites (including export sales from these sites to customers in the U.S., Mexico, and Canada), but excludes export sales from our North American websites.
AWS
The AWS segment consists of amounts earned from global sales of compute, storage, database, and other service offerings for start-ups, enterprises, government agencies, and academic institutions.
Information on reportable segments and reconciliation to consolidated net income is as follows (in millions):
  
Three Months Ended 
 March 31,
 
2016
 
2017
North America
 
 
 
Net sales
$
16,996

 
$
20,992

Operating expenses
16,408

 
20,396

Operating income
$
588

 
$
596

 
 
 
 
International
 
 
 
Net sales
$
9,566

 
$
11,061

Operating expenses
9,687

 
11,542

Operating income (loss)
$
(121
)
 
$
(481
)
 
 
 
 
AWS
 
 
 
Net sales
$
2,566

 
$
3,661

Operating expenses
1,962

 
2,771

Operating income
$
604

 
$
890

 
 
 
 
Consolidated
 
 
 
Net sales
$
29,128

 
$
35,714

Operating expenses
28,057

 
34,709

Operating income
1,071

 
1,005

Total non-operating income (expense)
(15
)
 
(52
)
Provision for income taxes
(475
)
 
(229
)
Equity-method investment activity, net of tax
(68
)
 
—

Net income
$
513

 
$
724



Net sales by groups of similar products and services is as follows (in millions):
  
Three Months Ended 
 March 31,
 
2016
 
2017
Net Sales:
 
Retail products (1)
$
19,916

 
$
22,826

Retail third-party seller services (2)
4,801

 
6,438

Retail subscription services (3)
1,300

 
1,939

AWS
2,566

 
3,661

Other (4)
545

 
850

Consolidated
$
29,128

 
$
35,714

____________________________
(1)
Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes electronics and general merchandise as well as media products available in both a physical and digital format, such as books, music, video, games, and software. These product sales include digital products sold on a transactional basis; digital product subscriptions that provide unlimited viewing or usage rights are included in Retail subscription services.
(2)
Includes commissions, related fulfillment and shipping fees, and other third-party seller services.
(3)
Includes annual and monthly fees associated with Amazon Prime membership, as well as audiobook, e-book, digital video, digital music, and other subscription services.
(4)
Includes sales not otherwise included above, such as certain advertising services and our co-branded credit card agreements.