Amazon Web Services has emerged as the clear market leader in cloud computing.
The Amazon Web Services summit in London was held earlier this week and CBR got the chance to sit down with AWS’s Carlos Conde, Head of EMEA Evangelism, to discuss why people are so keen on the cloud.
Q: What made Amazon, as an online marketplace, so well-placed to move into cloud?
Before being a marketplace, Amazon was a largely distributed eCommerce website, not only in the US, but also here in the UK and in France, Germany and many other countries. To operate at this scale, we had to operate our own data centres.
So we gained, since 1996, a lot of experience at operating data centres, and not only data centres but highly available and highly scalable websites and extremely secure facilities, because we are processing credit cards around the world.
We always had this philosophy that, as soon as we are doing something in a very efficient way, we open it for our users. As you mentioned, the good example is the marketplace. Amazon was an eCommerce platform and we realised that this is something you could offer to other partners in order for them to sell goods from the eCommerce website, so we opened the marketplace.
Amazon Web Services is the same logic. But it’s important to realise that AWS is not excess capacity from Amazon. It’s a complete service that has been built, and Amazon is a customer of AWS.
To completely answer your question, it’s important to keep in mind the business model of Amazon. Our model is low margins and very high scale. This is important to keep in mind, to put it into perspective with other traditional IT vendors which have the complete reverse business model, of low volumes and extremely high margins.
We definitely feel that cloud is a high volume business with low margins – it’s a retail business. That’s why for us, as an online retailer it is a logical move. Since day one we’ve been operating at extremely low margins with very high volumes, so now we’re also doing it for computing.
It’s these two sides.
Q: Why is flexibility so important to businesses nowadays?
Flexibility and agility are some of the main reasons why enterprises and start-ups are using AWS. It’s not only the flexibility and agility regarding the price. If you compare using AWS to a traditional IT approach where you have to provision and buy machines and so on, you of course have the difference between operational expenditure and capital expenditure, so this gives you a lot of agility in terms of economic perspective.
It’s also important in terms of speed of iteration. This is something that many start-ups, and now big enterprises like the Financial Times, have also learned. The speed of iteration beats the quality of iteration in terms of agility in the business. If you’re able to push data and change the software in your internal applications or in your public applications it makes you more agile and you can do more trial and error.
So, on the one hand you have the business agility that the cloud is way more cost-effective. Imagine you try a new business intelligence project and it doesn’t work, so you pay by the hour, it’s not too bad. You’re not tied to anything.
On the other hand, the speed of iteration comes from the fact that if you start a virtual machine, it takes a couple of minutes, maybe less. If you compare it to traditional organisations requesting a new server, that can sometimes even take a month.
It’s definitely a different story. You have a developer, you want resources, you have them now. You go with the traditional way, you have to do the request, call for tender, rack it, mount it…perhaps after a month you can work.
This flexibility comes from different angles. So you have the economic advantages, the speed – the third one is the auto-machine. In the last two years we’ve talked a lot about dev ops and automating operations; since day one, AWS has been offering a set of services with an API. Everything you do manually on a web console, this is something you can programme as well. So it’s basically a programmable data centre.
Q: Could this fundamentally change the business model for start-up IT?
Particularly for start-ups who base their activity on mobile applications or internal applications or any kind of IT-backed activity, it completely removes the risk. Traditionally you have to go to a founder, ask for money, invest this money in hardware and if your start-up doesn’t survive the first year or even less, well what do you do. You have all of this investment which you basically keep in your hands.
Because you pay only for what you consume and you have only the monthly Amazon bill, first, if your start-up is small you pay only for what you consume. But if you continue to grow, it adjusts automatically to what you need, which is important for start-ups. It’s doesn’t happen that finally your start-up becomes extremely popular and you’re a victim of your own success because you didn’t provision enough capacity. Here we’re going to be able to give capacity automatically to start-ups who need it.
They all have the same scheme – they started small and as they became popular they began scaling to massive loads.