Mumbai: The world’s largest online retailer Amazon.com Inc. became the fastest company to reach $100 billion in annual sales in 2016. Chief executive Jeff Bezos believes that the company’s cloud business, Amazon Web Services Inc. (AWS), too, will touch $10 billion in annual revenue this year—a conviction that prompted him to talk about how “dissimilar offerings like AWS and Amazon retail can grow quickly under one roof” in his letter to the company’s shareholders on 6 April.
That very month, Bezos appointed Jeff Wilke CEO of Worldwide Consumers and made Andy Jassy CEO of Amazon Web Services in “recognition of the roles they have played for a while”. Both are seen as likely successors to Bezos.
In an interview on his first trip to India after taking charge as CEO of the world’s biggest cloud services company, Jassy explains why he believes that enterprise data centres are doomed, why he advocates that companies use a single cloud vendor and why AWS will stay ahead of the competition. Edited excerpts:
What’s your India agenda?
We have over 75,000 customers in India that are using AWS from regions outside of India. So, we have launched our Mumbai region, which will be the sixth region in Asia-Pacific. The Mumbai region will have multiple data centres. Our clients can now leverage the AWS cloud to run their technology applications from infrastructure in India, and we can provide even lower latency to India-based end users, while they retain data sovereignty.
You have been with Amazon for 19 years. Tell us a bit about the shifts in the cloud business...
If you think about the old model before the cloud, start-ups had to raise several million dollars of capital from private equity firms and spend a good chunk of their capital on the company’s infrastructure and hardware without knowing whether or not their idea would work, and without knowing whether their offerings would have any traction. Now, you can try lots of variants of your idea until you find one that works. You are only paying for what you consume. Now, start-ups are able to raise funds at a much later stage and at a much more favourable valuation.
The cloud is unbelievably important to the competitiveness of enterprises. And lots of enterprises are building brand-new businesses that didn’t exist before. Novi Digital, a wholly owned subsidiary of Star India, is one of the largest media and entertainment companies in India. The company uses AWS to run Hotstar, a flagship over-the-top broadcasting platform for delivering movies and live sporting events via the Internet.
The public sector may not have the same competitive pressure to innovate because there is only one government in each country, but they are all under increasing pressure. For instance, the US has over 20,000 data centres, but only 7% is utilized—think about how much waste that is. Most governments have a lot of data centres that are not highly utilized. We think we have the opportunity to help those governments and it’s a pretty inspiring mission for us.
Anything specific that you are doing with the Indian government?
We have had conversations with the Indian government and will continue to do so. But we cannot disclose any specifics because of confidentiality agreements.
Are security and privacy still major concerns when companies and governments talk about cloud computing?
One of the biggest changes in people’s perception in the last three to four years is that they have now really come to believe that they have more security and more data privacy on the cloud than they have on-premise (also known as private cloud—a data centre that is on the company’s premises).
There are a few reasons for that. We have very strict physical access control on all our data centres. We also have multiple key management methods and a set of compliance capabilities and certifications.
The vast majority of security exposures in the last many years have been on-premise. The reality is that anybody who has spent a good amount of time on security will tell you that you have to be paranoid and you have to think about it all the time, but the key is in making sure that you have the right key to lock down on infrastructure and you have the right capability for the application builders to be able to protect their own applications, restrict access to those servers and applications, and encrypt that data.
Companies such as Microsoft, Google and IBM are beginning to offer stiff competition to you on the cloud. Besides, even clients and analysts believe that a multi-cloud vendor strategy is better than relying on a single vendor. You seem to suggest otherwise. Why?
When you make a decision to use an infrastructure provider, it is a big decision. Most companies don’t want to use the capability that their peer companies and their competitors are using. It’s painful for anybody to manage multiple stacks or platforms. It’s really time-consuming. It’s a lot of waste of money, people and resources. It’s hard to do well. Development teams hate it. It’s enough to develop competence on one platform, but it’s a lot to ask the development team to develop competence on two or three platforms. It also dilutes the buying leverage of companies because all providers have volume discounts. If you have to split across providers, it just gives you less leverage.
Where do you see the cloud business heading in the near future?
I really believe we are at the beginning. It’s amazing when we think about the fact that our business is a $10 billion revenue run-rate business and we are just at the beginning stage of enterprise and public sector adoption.
The US is probably 12-18 months ahead of any other country. We are at the very start of the biggest technology transformation of a lifetime and if you believe that very few companies are going to own their own data centres, this means all of their computing is going to move to the cloud. It is at the very early days of what I think is going to be a gigantic transformation.