AWS is on the threshold of adulthood, but is nowhere near grown up

The cloudy concern is a prodigy, but early promise is no guarantee of dominance


re:Invent Heading into Christmas 2005, could you have imagined that 16 years later a new player would have rewritten the rules of how business tech is delivered?

Could you have conceived of the notion that this new contender would already have swatted aside attempts by Cisco and HP to mimic its approach, trampled IBM, and forced Microsoft into a pivot and a reboot of its culture?

Could you have imagined this new company had $100 billion annual revenue on the horizon?

At Christmas 2005 I think the facts above weren't credibly imaginable – because Amazon Web Services was then 80 days away from launching its first cloud product: the Simple Storage Service (S3).

Today AWS has more services than anyone can be bothered counting. In its last four quarters, AWS's $57 billion in revenue left the devolved IBM and HPE in its dust. 44-year-old Oracle has been overtaken and Cisco is $8 billion behind. Dell's $94 billion annual revenue is within reach because AWS’s most recent quarter saw it post 39 per cent year-on-year growth and report customer demand had again accelerated.

Microsoft's $168 billion of total revenue will be harder for AWS to catch, but AWS may already be pulling ahead of Redmond's cloud business. Azure revenue gets tossed into a bucket that includes money earned from Windows and SQL servers in its cloud numbers, on grounds that they're "hybrid" products.

AWS’s impact is extraordinary. Every major business tech company has adopted the operational models it developed and champions. We write software differently to take advantage of services AWS pioneered. High-ranking members of the Top 500 supercomputer rankings exist on AWS for however many hours they're required, then vanish. Netflix distributed DVDs using snail mail before Amazon pioneered elastic compute, storage, and networks at scale.

I could go on, but hagiography is not the point of this story. Instead, I hope it reminds readers that AWS came from nowhere to be our industry's biggest trend-setter despite its many imperfections: the operation has been cynical about open source, can be predatory, and its unhelpfully sprawling product portfolio contains confusingly overlapping services. Deceptively simple pricing has delivered many unpleasant surprises.

AWS has also accumulated considerable market power. When it recently slashed data movement charges after Cloudflare introduced a competitive product, it was a reminder that the cloudy concern is the most profitable segment of Amazon.com – and that cloud buyers make that possible.

The cloud colossus looks poised to influence other markets, too.

Today, hybrid clouds are being defined by players with on-prem legacies to defend. AWS is enthusiastic about helping those players, because it drives demand for public cloud and meets customers' needs. The cloud giant has also shown it's willing to push more of its software constructs beyond its own datacentres – so far without directly challenging the likes of Dell, HPE, or Cisco. Were AWS to be more aggressive about making its software and hardware the foundation of hybrid clouds, its impact could be enormous.

Another issue is the extent to which AWS gets serious about applications. Today, its business application portfolio is small and its products haven't seriously threatened incumbent players. If the company decides it wants in, watch out.

Other issues to consider include the extent to which AWS makes Arm CPUs the new normal for cloud-native applications.

Were AWS a human, it would be approaching 16 years of age and therefore we'd have a fair idea of its trajectory and prospects – but also the certainty that it still has time to try a fistful of different paths.

It is possible that by Christmas 2037, 16 years hence, AWS will have settled into a disillusioned fourth decade. History suggests its influence will wane as more vigorous rivals emerge. But just as in 2005 it was impossible to imagine that AWS would emerge, never mind imagine the change it would create, on the eve of its re:Invent 2021 conference it's extremely hard to foresee what, if anything, could challenge the cloud colossus for some time to come. ®

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