Most people know about Amazon’s ambitions to sell everything from books and movies and smartphones to power tools and auto parts.
Less understood outside the technology industry is just how aggressively the company is also trying to become an important technology provider to other organisations — its aspirations just as big as those of Microsoft, IBM and Google.
Amazon Web Services already provides so-called cloud computing services at low prices to customers including the Central Intelligence Agency and Netflix. At a conference here last week for the web-services unit, company officials explained that Amazon was now trying to get more money from business customers by also offering services and processes that make it a competitor to traditional suppliers of business technology like Oracle.
Offering more capabilities to customers is a big deal for Amazon. A report last month by the Synergy Research Group said Amazon’s web-services unit has about a 27% share of the worldwide market for cloud infrastructure services. Microsoft is second with about a 10% share.
But there are indications that a pricing war and more focus from competitors could dig into Amazon’s lead. There are even concerns that the unit’s revenue growth has stalled in recent quarters.
What makes Amazon unique in the fight to own the computing cloud is what it’s not — a traditional tech company with a long history of providing products and services to business customers.
Finding a way to deliver services over the internet that behave like databases and other traditional software products will be critical to keeping its lead because older tech companies like Microsoft are already capable of doing it.
Amazon Web Services is banking on help from its customers to make its ambitions work. “Ninety per cent of our development is deep, sophisticated corporate users telling us what to build next,” said Adam Selipsky, the unit’s vice-president for products.
On Wednesday, the unit announced that in 2014 it had released 442 new products for its global network of computers and software, a 60% rise from all of 2013. It later raised that number to 449, including faster ways to write and publish software.
The lower number “was so this morning”, said James Hamilton, the enthusiastic executive who oversees the development of AWS. “This is a different world,” said Hamilton, a veteran of decades in companies like IBM and Microsoft before he joined the unit in 2008. “The speed is unbelievably different. We don’t slow down as we get bigger.”
But the unit could face challenges in its efforts. It has already had to deal with embarrassing system failures and changed its policies to suit national governments. Moreover, its parent company, Amazon, has returned less in profits in its 17-year life as a public company than cloud competitors like Google and Microsoft earn in a single quarter. If Wall Street grows tired of Amazon’s continued losses, it could also pinch AWS.
Amazon is not the only big tech company trying to lure businesses to the cloud. Microsoft, Google and IBM are all trying to get business customers to rent their cloud services rather than buy software, servers and networking gear.
Just a few years ago, public clouds like Amazon’s were considered experimental turf for technology start-ups. Today, companies like Johnson & Johnson, Intuit and General Electric are among the unit’s customers. In the past year, AWS says, the amount of data it stores has grown 137%. It sells twice as much of its basic computing as a year ago.
Analysts believe the pace is picking up across the handful of big tech companies providing cloud services. “Two years ago, public clouds were maybe 2% of all computing workloads,” said Lydia Leong, a senior analyst at Gartner. “Now they are more than 10%. By 2018, it will be more than 50%.”