Amazon Web Services aims to keep ‘king of cloud’ crown

By Edwin Yapp November 13, 2014

Stirring the competition pot

Amazon Web Services aims to keep ‘king of cloud’ crown: Page 2 of 2

The impressive growth of AWS is due in part to the way it has managed to capitalise on the growing acceptance of public cloud computing. The benefits of the public cloud, from a technology standpoint, are well known but acceptance has been less than stellar due to impediments such as security and privacy, scalabilty and reliability.

But I believe that over the years, three factors have forced many enterprises to re-consider their stance against public clouds.

The first is the rising cost – in terms of infrastructure, power and cooling, and skill sets – of running your own data centre.

The second is the need for business agility and the time-to-market advantage for companies trying to launch new products and services ahead of their competitors.

The third is the growing credibility of public cloud providers such as AWS, Google Inc, Salesforce.com Inc and Workday Inc.

Over the past few years, these companies have proven to large enterprise and government customers that they have the right computing feature sets, the expertise and skilled personnel, to manage data centres.

They have also successfully touted their reliability, security and privacy, and scalability to run enterprise-grade data centres.

Still, AWS remains the leader in this space and has over the years even challenged of some of its older, more focused rivals such as Microsoft Corp, IBM Corp and VMware Inc, who were at one time leaders in the corporate data centre and infrastructure service provider markets.

In fact, such was the ire of the Palo Alto, California-based VMware that its chief operating officer was quoted as saying last year at a partner conference that he couldn’t believe VMware can’t collectively beat “a company that sells books.”

“I look at this audience, and I look at VMware and the brand reputation we have in the enterprise, and I find it really hard to believe that we cannot collectively beat a company that sells books … that is our challenge,” said Carl Eschenbach.

Stormy cloud on the horizon?

Amazon Web Services aims to keep ‘king of cloud’ crown: Page 2 of 2

What kind of revenue and how much profitability does AWS bring to its parent Amazon.com?

It’s hard to say as the public cloud player doesn’t reveal revenue, but analysts and pundits have speculated based on some available data.

According to a rudimentary calculation by Jack Clark of ZDNet, Amazon could have potentially earned some US$700 million in 2012, while a Business Insider article, citing a forecast by Evercore Partners, said the division could have grown its revenue five times from then to about US$3.4 billion in 2013.

Of course, no one can be certain of these figures since market share numbers and the way service revenues are categorised are done differently by different research firms.

At a media briefing recently in Malaysia, AWS head for Asean Rick Harshman stressed that it does not break down its revenue, claiming only that the company is still seeing “phenomenal growth” not only in Western markets but also in South-East Asia.

AWS has also grown healthily in Malaysia and counts amongst its clients Malindo Air, iProperty.com, AmInvest, MyTeksi, iPay88, and AirAsiaGo.com.

Asked what made AWS stand out against the competition, Harshman claimed it has “deep expertise,” the widest feature sets in public cloud today, and a huge ecosystem of developers and partners to help it grow.

But while this is a testament to its prowess, it’s also apparent AWS isn’t the only public cloud game in town the way it was about five years ago.

Nipping at its heels is Google’s public cloud offering Google Compute Engine (GCE), which the search giant made publicly available in December, 2013.

Google has the scale and ambition to take on AWS, and while the latter is still the undisputed king, customers may not like to be locked into only one player, argues Barb Darrow of tech blog GigaOM.

And then there is Microsoft with its Azure platform, which started out as a platform-as-a-service (PaaS) offering, but has since grown to become a dominant IaaS player.

The mounting pressure on AWS has also caused it to slash its prices, a fact that it’s quite proud of, having done so 45 times since it launched its service in 2006, Harshman said.

“We are not foolish enough to think that others won’t get involved but we believe customers will still work with us based on what we have to offer,” he said.

So all eyes will be on AWS this week – especially with the company coming off the back of some weak results declared by its parent last month – to witness how the leader in this space is going to stave off the competition of its rivals, something you can count on Digital News Asia to bring you in the coming days.

Meanwhile, check out two articles that speak about the rising competition against AWS: One from a technology point of view, and the other from the financial perspective.

Edwin Yapp reports from re:Invent 2014 Las Vegas, at the kind invitation of Amazon.com. All editorials are independent.