Amazon Web Services (AWS) was developed alongside the online retail giant’s vast e-commerce from the world’s largest online retailer’s inception. Although having built its reputation and brand recognition on its retail operations, Amazon has gone on to expand its offerings into products and services as diverse as media, electronics and cloud computing.
Responsible for over 4% of Amazon’s revenues in 2013, AWS has seen Amazon sink over 10 years of development and millions of dollars of investment into the world’s largest cloud service provider. Available in over 190 countries worldwide, AWS’s infrastructure is vast and, having taken full advantage of its position as a cloud services pioneer, it now adds enough capacity on a daily basis to support Amazon’s entire 2004 operations.
Amazon is heavily focused on developing what it refers to as AWS’s public cloud, adhering to its belief that eventually practically all computing will end up in the cloud. However, the company has been forced to compromise as that stage has not yet arrived. Although offering a hybrid cloud service in acknowledgement of many organizations still maintaining a private cloud, AWS offers its hybrid cloud services with a mind to encourage the migration of all of the data of organizations that use the service onto its public cloud.
Servicing private and public organizations across a vast spectrum of industries, AWS remains largely under the radar. End customers of companies and government agencies utilizing AWS ordinarily remain entirely unaware as to how they have received their products and services, indicating success on AWS’s behalf.
Uniquely, Amazon has managed to attract direct competitors such as Netflix to its AWS cloud service due to it not only being run as a separate entity, but also due to the value of the products and services AWS offers.
Furthermore, its customers are not confined to the private sector. Through its GovCloud, AWS offers cloud services to federal and state government agencies while providing the necessary levels of regulatory compliance. It has also shown its flexibility, building a private network for the CIA which will also provide cloud services to 17 other US government intelligence agencies while maintaining the strictest levels of security and privacy.
Encouraging entrepreneurship and fostering start-ups is another feature of AWS’s operations, with Amazon viewing them as potential long-term cash cows. It is therefore in the company’s best interests to develop strong relationships with, and goodwill amongst, start-ups and those looking to develop their own company. In the long run this will benefit Amazon’s income statements.
Despite AWS’s growth, and its market leading share of 27%, Amazon has faced increased pressure from investors due to revenue growth rates being weaker than that of its rivals as a result of its aggressive pricing policy, as well as the level of investment being poured into AWS without the corresponding returns and profit margins. The company also has to contend with significant competition in the form of IBM, Google, and Microsoft, the latter of which is demonstrating rapid revenue growth with its Azure cloud platform. AWS will inevitably be keeping a close eye on developments from these companies.
Analysts have speculated that AWS will be spun-off, although this is far from certain. Amazon’s drive to pioneer an exodus from private clouds to public clouds, and to be at the forefront of the global shift towards cloud computing, would suggest the company is not yet ready to spin-off AWS. Additionally, as recently as 2014, Amazon CEO Jeff Bezos has being quoted as being “very excited” about the opportunities AWS provides, claiming it will one day become Amazon’s largest business and greatest source of profits. If Amazon can continue to convince companies to move to the cloud, and away from internal solutions, there could well be a huge migration, benefitting Amazon immensely.
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Amazon Web Services: Facilitating Amazon’s cloud computing philosophy
