Amazon Web Services (AWS) has been a leader in cloud since it launched Elastic Compute Cloud (EC2) and Simple Storage Service (S3) the first widely accessible cloud computing infrastructure service a decade ago in 2006. What was given little respect in 2006 has evolved into game changing technology that impacts everyone from start-ups to multinational organisations and even governments. And today, while others, most notably Microsoft, have somewhat closed the gap in terms of measurable market share, AWS maintains an overwhelming lead in terms of thought leadership. When people think about cloud, AWS is the first name that comes to mind.
The company also continues to push out new features and capabilities at a relentless rate. There is no longer any doubt that AWS is ready for primetime when you consider the customers and the workloads now deployed on it. Even other vendors use AWS as infrastructure for critical offerings – Adobe with Creative Cloud and Salesforce with its IoT Cloud and Heroku.
On 7th July, AWS held its annual UK summit where it shared its vision with over 5,000 attendees. Unlike a few years ago the audience is not mostly start-ups, but organisations of all sizes, from small and medium businesses up to the largest enterprises: the latter being reflected by AWS hosting a dedicated one day enterprise summit.
There was little new in terms of feature announcements – that is reserved for the annual AWS re:Invent conference in November. However, the company did announce long-term commitment to the UK in the form of investing in a new Region and recognising the country as a “fast innovator and adopter of technology with a huge talent pool”. This will certainly reassure many in the wake of the “Brexit” outcome of the June 2016 referendum for continued membership of the EU, which sees the UK negotiating to leave at some point in the near future.
An unusual heritage for an IT vendor
Despite the market dominance it can sometimes be challenging to view AWS as a vendor in the same way as its competitors. Perhaps this is in large part due to it being a business unit of Amazon, the online retailer best known for selling all sorts of retail products. While this may not be as much of an issue as it was once, we still see confusion among people concerning the line between Amazon and AWS, especially when conducting industry and market surveys.
Another contributing factor to this perception is that AWS has always focused on the platform. The message seeming to be that they provide the environment and customers do whatever they want with it. The reality though, is that many customers, especially larger ones, require much more than simply a blank canvas where they bring the paints and brushes.
This issue of perception probably does not mean much to AWS given the scale and breadth of their client base, but the capabilities required to change the perception are in themselves important to AWS sustaining its market position. After all, we know all too well how dominance in technology can come and go quickly (Netscape? Nokia?).
The power of three:
1. AWS Marketplace – helping to bring organisations out of the data centre
The concept of a marketplace has become almost table stakes with respect to the leading cloud platforms. AWS Marketplace performs the critically important function of broadening AWS’s appeal to the maximum possible number of organisations. The AWS Marketplace offers 2,800+ products from 900+ vendors across 23 categories that can be quickly and easily deployed to the AWS environment.
The obvious benefit to the customer is the ability to have an application up and running very quickly and to pay for it in a flexible and cost-effective way (especially compared to more traditional licensing models). As many of the applications are commonly used within the market (Cisco, Trend Micro, SharePoint, SAP Hana One, Tableau, Chef, Puppet etc.), a benefit of the marketplace becomes clear when one considers a feature of cloud means not having to go through the pain of figuring out and managing procurement and deployment.
Some Marketplaces are often full of products that people have never heard of, or mostly from the one vendor operating the cloud, whereas AWS has a number of products that enterprises will be familiar with, such as leading vendors in Networking, Security, BI, Database, Tools and Storage. Net App, MarkLogic, and Sophos are additional examples. This makes the AWS Marketplace more useful to such customers and this is especially important to AWS because they don’t have the heritage of services that others have with experience in such applications.
More to the point, by making it easy and cost-effective to deploy these applications into the AWS environment, it makes it easier for customers, particularly larger ones, to build and deploy workloads supported by these applications into AWS. This makes the AWS Marketplace a competitive option against those vendors who might also expect to deliver the configuration and operation of these common applications for client organisations.
A well-recognised challenge with deploying such legacy applications into modern cloud environments has been issues with reliability and security. In some cases simply moving an application that has typically run on premise to the public cloud causes numerous problems. To address this AWS has both Category management teams, both business centric and technical architecture, that work closely with marketplace application vendors to make sure that their applications are optimised to run in AWS.
There is an Apple App Store like process to vet and validate applications before they appear in the marketplace with the added advantage of removing any of the headache for European ISV’s, of having to deal with the US federal tax regulations for purchasing US based services. By doing this AWS is able to provide customers with the aforementioned benefits of speed and cost while ensuring important concerns such as security and quality of service are met. Taken together this makes AWS appealing to enterprise and small business organisations looking to migrate to cloud quickly and easily.
2. Professional Services – helping organisations build for the cloud
The capability to help marketplace application vendors optimise for the AWS environment is something that is also available to AWS customers. Through its professional services capability, AWS is able to provide technical assistance, including people on site, that will help organisations move to the cloud. When one looks at other successful vendors, we see that a professional services capability is an important feature set in their portfolio. IBM’s Global Business Services drives much of the company’s revenues as its core enterprise customer base, has a requirement for the type of hands-on help that only such a capability can provide.
Enterprises in general need and demand more than just technology. They especially want help to know how best to use it for their specific requirements. Through having a professional services capability AWS shows that it not only understands this need but can deliver a service that is critical for many organisations when selecting a technology or vendor. This differentiates it from some of the modern cloud competitors who believe that such support can be provided solely via a Google Hangout. Vendors such as Microsoft, IBM and HPE do not have these capabilities just to boost headcount but because many customers demand it.
Like others, AWS’ professional services capability is supplemented with an ecosystem of partners who are also able to provide targeted technical and business change assistance as well as increased scale to customers. Among AWS’s partners are some of the largest such organisations including Accenture, Wipro and Deloitte as well as a broad mix of smaller and regional based partners.
3. Cloud9 – helping developers to build for the cloud
It is said that there is no longer any value in tools, especially those such as Integrated Development Environments (IDEs). Whereas once vendors like Microsoft and IBM could make respectable revenues on tooling, today it is largely given away for free.
That should not be taken to mean that IDEs have no value at all. In fact, Microsoft’s Visual Studio is critical in sustaining its share of the developer ecosystem and technology platform market. Even Google now has a proprietary development tool for building Android apps (Android Studio) despite early protestations that it would not create such a thing.
In a world where the developer and deployment platform is the cloud, such tools are also migrating to be cloud-based. Both Microsoft and IBM have cloud-based IDEs that run within a web browser. When it comes to development, having an environment that is closely aligned with the deployment technology platform has numerous benefits that make it appealing especially to large organisations.
Shortly after the AWS Summit the company announced the acquisition of Cloud9, perhaps the largest and most popular of the independent cloud-based IDEs. This now provides AWS with an opportunity to provide developers with both the tooling and workflow environment to create, deploy and manage new workloads developed to run in AWS.
From startups to enterprises – AWS is for everyone
When one looks across these three areas, what is clear is that AWS is creating a capability that looks very much like the traditional vendors it competes with. Simply having a technology platform is not enough to succeed in a market of customers of different sizes. To hold its position against the likes of Microsoft and IBM, AWS has needed to demonstrate more explicitly that it appreciates that not all organisations are born on the cloud, greenfield start-ups.
At the opposite end of the spectrum there are enterprises that require: tools with which to develop, deploy and manage workloads that they create; the ability to run easily and effectively the type of applications that they have traditionally depended upon, and hands-on help with designing, architecting, deploying and managing cloud-based workloads. In this regard, AWS has been smart in addressing these areas in the way that they have.
Hybrid is still an awkward talking point for AWS
There are still some weaknesses in what AWS offers. Perhaps, first among these is its support for hybrid cloud. While the company has shifted its position from believing that cloud has to mean public, its support for a hybrid environment lags behind its main competitors. The future may be leading to an “all on” public cloud for the majority; the reality though is that in the short to medium term we see organisations requiring hybrid environments that allow them to almost seamlessly move workloads between private, virtual private and public infrastructures as suits their needs and requirements.
There are partners with products that can help customers run elements of AWS in their own data centres, such as HPE’s Eucalyptus solution. However, while AWS engages with these, it would be good to see a more distinct strengthening of their capability to support hybrid environments, perhaps even the potential of building its own capability. Otherwise vendor’s such as Microsoft, IBM, HPE and VMware will be left with a point of attack that makes a lot of sense to the immediate goals of many organisations.
Room to showcase local talent, leadership and a more glitzy exhibition hall
Once again, AWS UK Summits saw CTO Werner Vogels, a charismatic presenter, showcase the vision and strategy that underpins AWS’ cloud leadership position. Future UK AWS Summits offer great opportunity to expose more of the UK AWS team, especially those who are able to build a local reputation and become the UK face of AWS. CIC knows from research into technical ecosystems that giving vendors a human face that people can interact with, and come to know, is one of the best ways to drive engagement, thought leadership and expose best practices. It would be an opportunity to build a more connected local community.
Going forward, it would be good if AWS did more to showcase its larger partners in the Summit’s Expo area to reflect the level of support that the company can bring to enterprise customers. As analysts, we attend a range of events and many at London’s ExCel Centre. As a result we often see how effective the well-marked presence of sizeable ecosystem partners and a smartly planned exhibition layout can be in raising the confidence of enterprise clients.
CIC’s conclusion: A decade of success is a foundation for the future
The AWS story is a remarkable one and the company should be celebrated for achieving what it has done over the last decade. The cloud market will become increasingly competitive and the landscape evermore complex as more IT capabilities move to the cloud. Simply being a deployment environment is not enough and while AWS certainly leads and exceeds at that it needs more to be successful over the long term.
Through initiatives such as the AWS Marketplace, the company’s professional services facilities and the acquisition of Cloud9, AWD is showing, unlike some of its West Coast neighbours born of a similar era, that it understands why traditional software vendor’s have been and continue to be successful. It is now matching those vendors in terms of its holistic offering.
If one looks at Google, a company that seems to be making a virtue of not being like other vendors, then we see a very different picture of success with regards to cloud platforms: AWS commands over 30% of the market while Google (according to research by Synergy) languishes at 4% below Microsoft (9%) and IBM (7%).
Rather than a blank canvas, AWS is now providing customers with the paints and brushes and in some cases even some paint by numbers options. All of which are good signs for market success over the long term. More importantly the overall offering has become one that competes with other vendors on more equal terms than would have been the case previously. Gradually the ways in which competitors can challenge AWS are being muted. AWS understands better what the customer wants and needs and is building capabilities to match.