Amazon recently ran its 4th AWS Summit in London celebrating 9 years since it launched the market leading public cloud platform. Amazon Web Services started life as a small number of basic services and now has more services and features than anyone could probably name. Its scale as a product is matched by the scale of its success. Apparently it runs 5x the compute than the next 14 biggest cloud providers combined. Its market share is estimated at 30% with significant year-on-year growth. Its customers come from all industries and are of all sizes from start-ups to enterprise.
Amazon’s customer and partner breadth was represented in London by the partner and solutions expo area where start-ups like GoSquared rubbed shoulders with Accenture. That Accenture are supporting AWS is a clear sign that it is truly an enterprise vendor and no longer just the cloud platform of start-ups. The fact that it has been around for 9 years is part of its advantage. In cloud AWS is about as mature a company as you will get. AWS launched before Microsoft, IBM, Google and just about everyone else. In doing so it has built up a heritage of successful customer stories, most often cited being Netflix.
The others have started taking the cloud more seriously in recent years, especially Microsoft (Azure) and IBM (SoftLayer). Both are now growing market share with Microsoft seeing good growth in the last couple of years, although much of that is believed to be due to its SaaS offerings such as Office 365 rather than the development platform.
Despite market dominance what came through at the summit was a clear sense that Amazon is not complacent. Unlike many large technology companies who achieve similar status Amazon, appears to remain humble and wary of competitors. This is reflected in the relentless rollout of new services and features. Something that it does at a rate that makes even Google look old and slow. Even in the start-up zone of the expo, the market that AWS perhaps dominates more than any other, they were aware of competition from the likes of Microsoft and are taking nothing for granted. To this end, Amazon recently launched a start-up focused program called AWS Activate to match the likes of Microsoft’s BizSpark.
Last week Amazon released financials for AWS for the first time. Something that the market was looking forward to as it not only revealed a lot about the size and profitability of AWS (which was good) but provided a sense of where competitors are as well. It is also a step towards AWS being seen as separate to the larger business. As we know Amazon has been dogged by lacklustre earnings since inception with its focus on growing market share. This is something that is increasingly threatened by the likes of the Chinese behemoth Alibaba.
Starting to treat AWS as a more independent entity will give reassurance that it is a healthy, profitable business in its own right. More importantly it offers tentative steps towards increasing separation and a clear sign that AWS is a technology vendor and not just part of a retailer. This will only help it to continue to compete with the traditional vendors, especially in the enterprise space.
Perhaps most interesting from our perspective was how Amazon is handling customers who are looking to make the transition from traditional on-premise data centres to the cloud. Greenfield development in the cloud is much easier, especially for young born-on-the-cloud organisations, than bringing legacy workloads out of the data centre. This is where we see enterprises and traditional businesses struggle and where we see a lot of business for big consulting firms. Old architectures do not work that well in cloud environments but re-architecting 15 year old mission critical applications is no small task. Changing architectural and development patterns for experienced architects and developers is not easy either.
Amazon is aware of the transformation that is often required within large organisations to move to cloud. It even looks to be launching specific new services to try and help with this such as its file system offering (Elastic File System). Understanding the challenges of this audience and reflecting it in products and partnerships (such as Accenture) is critical for vendors that neither have a history of working with enterprises or in-house consulting capabilities. It is good to see that Amazon has an awareness of this and is making some good moves to address it. It is perhaps its biggest weakness against the likes of Microsoft and especially IBM who both have consulting businesses.
Cloud is still in its infancy and the amount of coverage that it receives perhaps gives an impression of a more mature market. For emerging technology businesses it is the default development environment but for others it is still an unknown with many concerns such as security, jurisdiction and cultural barriers. The competition between vendors is intense and being fought on all fronts from services and features to of course price. It would be easy for Amazon to be complacent but it clearly is not and that is perhaps not just the biggest takeaway from the summit but also most promising for the long battle ahead.