Amazon moves to extend its cloud-computing dominance4 min read . Updated: 18 Nov 2014, 12:40 AM IST
Amazon is now offering services that make it a competitor to traditional suppliers of business technology
Las Vegas: Most people know about Amazon.com Inc.’s ambitions to sell you everything from books and movies and smartphones to power tools and auto parts.
Less understood outside the technology industry is just how aggressively the Seattle-based company is also trying to become an important technology provider to other organizations, its aspirations just as big as those of Microsoft Corp., International Business Machines Corp. (IBM) and Google Inc.
Amazon Web Services (AWS) already provides so-called cloud computing services at low prices for customers including the US Central Intelligence Agency and Netflix. At a conference in Las Vegas last week for the web-services unit, company officials explained that Amazon is now trying to get more tech dollars from business customers by also offering services and processes that make it a competitor to traditional suppliers of business technology like Oracle Corp.
Offering more capabilities to customers is a big deal for Amazon. A report last month by Synergy Research Group said Amazon’s Web-services unit has about a 27% share of the worldwide market for cloud infrastructure services. Microsoft is second with about a 10% share.
But there are indications that a pricing war and more focus from competitors could dig into Amazon’s lead. There are even concerns that the unit’s revenue growth has stalled in recent quarters.
What makes Amazon unique in the fight to own the computing cloud is what it’s not—a traditional tech company with a long history of providing products and services to business customers. Finding a way to deliver services over the Internet that behave like databases and other traditional software products will be critical to keeping its lead because older tech companies like Microsoft are already capable of doing it.
Amazon Web Services is banking on help from its customers to make its ambitions work. “Ninety percent of our development is deep, sophisticated corporate users telling us what to build next," said Adam Selipsky, the unit’s vice president of products.
On Wednesday, the unit announced that in 2014 it had released 442 new products for its global network of computers and software, a 60% rise from all of 2013. It later raised that number to 449, including faster ways to write and publish software.
The lower number “was so this morning", said James Hamilton, the enthusiastic executive who oversees the development of AWS. “This is a different world," said Hamilton, a veteran of decades in companies like IBM and Microsoft before he joined the unit in 2008. “The speed is unbelievably different. We don’t slow down as we get bigger."
But the unit could face challenges in its efforts. It has already had to deal with embarrassing system failures and changed its policies to suit national governments. Moreover, its parent company, Amazon, has returned less in profits in its 17-year life as a public company than cloud competitors like Google and Microsoft earn in a single quarter. If Wall Street grows tired of Amazon’s continued losses, it could also pinch AWS.
Amazon is not the only big tech company trying to lure businesses to the cloud. Microsoft, Google and IBM are all trying to get business customers to rent their cloud services rather than buy software, servers and networking gear.
Just a few years ago, public clouds like Amazon’s were considered experimental turf for tech start-ups. Today, companies like Johnson and Johnson, Intuit Inc. and General Electric Co. are among the unit’s customers. In the past year, AWS says, the amount of data it stores has grown 137%. It sells twice as much of its basic computing as a year ago.
And analysts believe the pace is picking up across the handful of big tech companies providing cloud services. “Two years ago, public clouds were maybe 2% of all computing workloads," said Lydia Leong, a senior analyst at Gartner. “Now they are more than 10%. By 2018, it will be more than 50%."
In addition to parading mainstream companies across the stage at its conference, Amazon released a type of database aimed straight at the core business of Oracle, the world’s largest database company. Oracle declined to comment on AWS.
Selipsky said Johnson & Johnson had helped Amazon shape its desktop product, which was initially announced a year ago. Although AWS is known mostly for selling basic computing services, he said that future products would include sophisticated software around managing user behaviour, software for compliance in regulated industries like finance and migration of existing software running on corporate computers to the cloud.
By running the customers’ software within their own data centres and listening closely to their needs, cloud companies learn more quickly about customer behaviour, figuring out which incremental improvement they can immediately deploy across their networks. And then they can turn around and give those customers exactly what they want.
At least, that’s what the cloud tech companies like to argue.
“The cloud is cheaper, but that isn’t really what is driving companies into it," said Greg DeMichillie, the director of Google’s cloud business for corporations. “They want to be more experimental, faster, data driven. This is part of a larger change inside companies."
©2014/The New York Times