The Cloud War Chronicles: Is AWS Pulling Away from the Pack?

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Spend Matters welcomes this guest post from Jaime Leonard, of GEP.

It’s no big surprise that Amazon Web Services (AWS) is not only one of the fastest growing companies in one of the fastest growing industries around the world, but “AWS” has quickly become the generic name for cloud computing, as “Kleenex” is for tissues. AWS, a secure cloud services platform, offers computing power, database storage, content delivery and other functionalities to help businesses scale and grow. AWS reached $7.9 billion in revenue in 2015 and has already achieved $5.4 billion in Q1 and Q2 of 2016. This accounts for a 54% increase compared to Q1 and Q2 in 2015. With many companies eagerly looking to enter into the cloud platform for cost efficiencies and flexibility reasons, AWS has not only been able to recruit small to mid-sized companies, like Netflix and Airbnb, but also large companies like Kellogg’s, Siemens, Johnson & Johnson and Comcast. Synergy Research found that AWS holds approximately 31% of market share, while Google, Microsoft, and IBM collectively account for 22%, the next top 20 vendors (Alibaba, CenturyLink, Oracle, etc.) account for 27%, and the remaining 20% are numerous smaller alternatives. Recently, AWS has made some very aggressive and strategic moves to ensure it keeps on the appropriate growth rate and ultimately continues to dominate the market.

More recently, AWS has partnered with one-time competitor VMware to present a completely new offering that it previously couldn’t provide on its own. In this partnership, AWS will be VMware’s primary public cloud provider, and VMware will be AWS’ primary private cloud provider. So what does this mean? Companies can spend lot of time and money migrating from private to public cloud platforms. In many instances, it can be a matter of redesigning a company’s entire infrastructure in order to migrate to a public cloud. Unlike Microsoft, AWS has not been able to serve the customer group that chooses to keep their own internal data centers, which is where VMware steps into the picture. The partnership will let customers use VMware data center management software on AWS’s cloud computing service. Essentially, this will allow companies to continue using their existing data center hardware but also use AWS’s cloud service to power their software via VMware. This can potentially open up a whole new customer group for AWS in the months to come.

What better than to also create a strategic alliance with one of the largest network providers? That is exactly what AWS has also done with the network powerhouse AT&T. As of October 2016, AWS and AT&T entered into a multi-year strategic alliance that will mutually benefit both parties. This alliance will allow new and current customers to migrate, as well as utilize, the AWS cloud via the AT&T network. The integration will focus around providing a reliable business network with high priority around threat management and security. Mo Katibeh, senior vice president, advanced solutions, AT&T Business Solutions, stated in a press release, "Together, AT&T and AWS can help streamline the leap to the cloud. We're helping businesses connect everything and anything to the cloud. More importantly, we're doing this so it can be simple, scalable and highly secure." This partnership is potentially lucrative for both AWS and AT&T, whereby they will have the ability to pull the vast customer base of each firm together to grow each other’s business.

Not only has AWS focused on critical partnerships and alliances, it is also keeping in mind innovated technology. Without the technology, AWS would not be where it is today. Recently, AWS has made key advancements into its budgeting tool for its users. Cloud computing can be a very expensive line item cost to many companies and, if not monitored effectively, could rack up a hefty annual cost. To help remedy this concern, AWS has developed a more comprehensive “Budgets” feature, in which customers can actively track and monitor cloud spending. This feature is highly attractive to those companies who need to keep a steady watch on their budget. The AWS Budget tool allows users to enter up to 20,000 additional budgets per account, which will allow companies to monitor various business units and more accurately track against department budgets. This was a big ask by customers and was something that Microsoft Azure struggled with in responding to immediately, and ended up open-sourcing the billing portal, which allowed customers to add multiple subscriptions to the tool. Many other competitors, like Google and Microsoft, have simple cost calculators, but having a more comprehensive budgeting tool gives AWS an edge over its competitors, especially for companies that require this next-level ability to manage costs in a penny-pinching market.

Geographical footprint has been another big focus for AWS, which recently announced that France will be the newest region in Europe to go-live sometime in 2017. This news comes a few months before its expected launch in the U.K. to accompany Ireland and Germany for the European regions. AWS would potentially be the first hyper-scale cloud provider to have infrastructure in all three of Europe’s largest economies. AWS is currently in 35 availability zones in 13 regions globally, with Canada and China going live within months. Microsoft Azure’s presence is currently at 28 regions after a recent launch in the U.K., and Google is currently at five regions, with eight newly announced regions for 2017. It appears as though AWS plans for growth around the world won’t be slowing down anytime soon, especially with fierce competition at their backs.

It is fair to say that AWS is consistently taking strategic steps to ensure the growth they need in order to retain the drastic cloud computing market share that they have captured recently. AWS has taken the base product of hosting services and have expanded and added critical capabilities outside of a base offering. Whether through strategic partnerships and alliances or expanding footprint and capabilities, AWS is looking at a holistic view to capture those untapped customer groups to retain and gain overall market share. Customers can expect to see continued investment and expansion by AWS, making it a very enticing time to consider AWS in this ever-changing cloud war. This will be crucial in the months and years to come, and we can expect Amazon to stay on top of these trends.

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  1. James Duerden:

    Very interesting, and coincidentally topical for us at Market Dojo – we’re currently in the process of evaluating the top cloud providers as we make our own move from private hosting to a cloud service; for various reasons our currently leaning is closer to the #2 (by market share) Google, but Amazon’s route from strength to strength and continued increase in included offerings are extremely tempting factors.

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