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April 8, 2016updated 05 Sep 2016 11:30am

Cloud wars: AWS ready to hit $10bn in sales as Jassy is named CEO

News: Microsoft & Google piled on the pressure with customer wins but it doesn't seem to have slowed Amazon Web Services.

By James Nunns

Anyone watching the cloud market over the past month could be forgiven for thinking that Amazon Web Services is starting to feel the pressure from rivals Microsoft Azure and Google Cloud Platform.

Recent customer moves have seen Google sign up big names such as Walt Disney, Home Depot, Apple and Spotify, while Azure picked up BMW and revealed a raft of new services. Dropbox an early adopter of AWS also decided to go it alone in cloud and move away from the company.

Most of these customer deals mentioned are AWS customers and people were starting to question whether the leading vendor was starting to crack under pressure.

Anyone thinking that can now put their mind at rest as AWS is as strong as ever and will become a $10bn business this year, according to a letter to shareholders from Amazon CEO Jeff Bezos.

Parent company Amazon, as a whole, set the pace for rapid growth after becoming the fastest company to reach $100bn in annual sales in 2015, but AWS is outpacing its parent by hitting $10bn this year.

The growth has been helped by a customer base which is over one million people and by being used by the likes of Adobe, Capital One, GE, Netflix and more.

AWS has a long way to go before it overtakes its parent company but it’s certainly made a good start in its first 10 years.

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To signal the success of AWS, Amazon has revealed that Andy Jassy, the head of the cloud computing business, is now the CEO of the unit. The company also said that Jeff Wilke is now the CEO of the consumer business.

Although the two of them have essentially doing these jobs for a long time, it is a sign of the strength and size of the units to have the title of CEO. The move will also fuel rumours that AWS could be spun off as an independent business.

To dispel these rumours the company said in a blog post: "This is not a reorganization but rather a recognition of the roles they’ve played for a while."

Few could have predicted the growth of AWS and some also didn’t predict the power that cloud would have in the tech world.

A report by Frost & Sullivan titled, ‘To win the cloud wars, invest in marketing, not technology,’ draws focus to comments made in 2008 by then Oracle CEO Larry Ellison. Ellison questioned the hype around cloud saying: "The computer industry is the only industry that is more fashion-driven than women’s fashion… Orange is the new pink; and Cloud is the new SaaS; Cloud is the new virtualization…It’s really just complete gibberish."

"I don’t understand what we would do differently in the light of cloud computing, other than change the words in some of our ads," said Ellison. Oracle now has made a massive reversal and is going all-in on cloud and is targeting AWS.

Ellison did raise some valid points, the technology, to some extent, has been around in various forms for a while and the wording of ads is important.

Barely a day goes by without seeing an advert on TV or on the side of taxi cabs for HPE, Microsoft Azure, IBM. The powerful marketing efforts from these companies and AWS has helped see the technology become rooted as a must have.

HPE Tube Ad

The report says that some companies have underestimated the importance of marketing, instead relying upon their technology to just introduce innovations and almost expect adoption.

This is a problem that seems to have been felt by Google with its cloud platform. While no one can question the technological expertise of Google, they have failed to translate that into market dominance in the cloud market. It has been suggested that they approached the market in the wrong way and that their tech first approach to messaging just didn’t resonate with many businesses.

AWS got it right early on but the market isn’t won and there is plenty of scope for challengers to catch up.


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