Amazon is celebrating the 10th anniversary of its ground-breaking cloud computing platform Amazon Web Services (AWS). Spectacular growth has seen it become by far the largest provider of cloud services on the planet, but can it maintain its market lead when an increasing number of rivals including Microsoft, IBM and Google are gunning for a slice of the action?
It was March 14 2006 when Amazon announced the launch of Simple Storage Service (S3), an online file storage repository that offered users access to scalable storage at an attractively low cost. Amazon followed this up later the same year with a limited beta of Elastic Compute Cloud (EC2), which added the ability for users to operate virtual machines on its infrastructure.
AWS has since proven a massive hit with developers and startups, providing the ability to build applications and services quickly and without having to pay up front for lots of expensive server infrastructure to run them.
Indeed, it has enjoyed such success that AWS now spans the globe with a presence in almost every geographic region, and research firm Gartner estimates that it has 10 times the available capacity of most of the other cloud providers added together.
"Amazon essentially had first mover advantage. It already had a proven infrastructure model and it found a simple way to monetise that," said Clive Longbottom, service director for analyst Quocirca.
"It made simple compute and storage resources available in a way that could be funded off the back of a credit card. Since then, it has grown its services and lowered prices on an ongoing basis, so keeping itself relevant."
But the cloud services arena is fast moving and still at a fairly early stage in its history, and Amazon itself admits that things are changing as cloud computing starts to gain traction among large enterprise firms, a more cautious bunch than the developers that have fuelled Amazon's growth so far.
Whereas the firm used to be bullish that all IT functions will migrate to the cloud, last year saw a change in tone, with AWS senior vice president Andy Jassy telling customers at the firm's Enterprise Summit in London that hybrid cloud will be the reality for the foreseeable future, especially where large corporates are concerned.
"Even though there is a transition going on, there are a lot of companies that aren't ready to retire their data centre assets yet, and what they really want is the ability to run their on-premises footprint seamlessly with AWS, which is why we have built a whole number of services in this space over the past three or four years to make this simpler," he said.
This requirement for cloud services to integrate seamlessly with whatever infrastructure an enterprise customer is already operating opens the door for rivals that have an existing relationship with those customers, firms such as Microsoft, IBM SoftLayer and even VMware.
Microsoft, for example, has been working to make it as seamless as possible for customers to control any resources they provision on its Azure public cloud platform using the same System Center management suite that many use for Windows servers in their own data centre.
Likewise, VMware is also trying to take advantage of the customer base it managed to build up through its leadership in server virtualisation in the data centre by adding a public cloud presence. By using the same technology to power its vCloud Air platform as customers are already running on premises, VMware hopes this will make it the platform of choice when building a hybrid cloud strategy.
Other service providers are targeting large organisations with promises of better quality of service - especially where they have data centres located close enough to major commercial or financial centres such as the City of London to deliver low network latency or high bandwidth.
There may also be issues for those startups that came to AWS in the first place because it was easy to get started with just a credit card for payment, once they begin to grow and become established companies themselves.
"An organisation cannot fund the running of a mission-critical app off the back of a credit card. It expects to have a proper contract in place - and for many small and mid-sized organisations, this is where things get a little gnarly," said Longbottom.
"AWS' default contract is one where the risk lies with the customer. Unless you are a large company wanting to spend a lot with AWS, it is highly unlikely that you will be able to sit down at a table and negotiate a proper contract - it is far more take it or leave it," he added.
However, Amazon's lead in the cloud market is such that it has little to worry about at the moment. The firm continues to add capacity and reduce prices over time, as well as boasting the most diverse array of services and application programming interfaces (APIs) for developers to make use of. But we can expect to see greater competition as the cloud market matures.
"Overall, AWS is still in a very strong position, and it has the deep pockets required to get a few things wrong and correct them," said Longbottom.
"Cloud computing is still in its infancy, however - a lot can change in a short period of time. Other players that can demonstrate greater contractual flexibility while making life easier for the less tech-savvy organisation can do well," he added.
V3 is hosting a Cloud and Infrastructure Live summit on 20 and 21 April discussing numerous aspects of the cloud and how to best use it at your organisation. Sign up now to find out more.
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