Why does Amazon still dominate the cloud world?

Amazon has long been the gold standard for public cloud but its array of support and services suggests a market-leading maturity

Amazon Web Services (AWS) has long been the public cloud gold standard for developers and startups. But Amazon’s enterprise speak – hybrid cloud, security, data sovereignty, and management and support  – signifies a maturity that could help it retain its lead.

“I have had unsolicited feedback from many enterprises praising AWS support and management,” said analyst Carl Brooks from 451 Research Group.

“That is absolutely new and a noticeable improvement in the last 12 months.

“When I started, there wasn't even a ‘contact us’ page on its website.” A few years ago, Amazon did not even list phone numbers while selling its cloud services. But today, it has dedicated support teams and 24/7 help for its customers.

There was a telling statement of AWS’s enterprise approach at the company's re:Invent 2014 conference, in that it was less about price cuts and startup use cases – and more about management, security and workload-specific features.

“Almost all the new services launched at re:Invent 2014 fit squarely into well-known enterprise IT needs,” Brooks said.

Amazon debuts Aurora database

For one, Amazon launched relational database engine Amazon Aurora to go after traditional enterprise database offerings from Oracle, IBM and Microsoft.

“Old relational database engines have punitive licensing terms, no flexibility, they are old and clunky and costly, they are less flexible, are proprietary in nature and lock users in,” said AWS chief Andy Jassy, to the thundering applause of 13,000 delegates.  

Aurora allows users to run six million inserts per minute, and 30 million selects per minute and costs 29 cents an hour. “It combines the speed and availability of high-end commercial databases but costs a tenth of the price,” Jassy said.

“What AWS is essentially doing is taking all the layers of the database stack, commoditising them and offering them as services,” said IDC research manager Larry Carvalho. “This enables it to do an enterprise-grade database service at open-source cost – and to redefine relational database services.”

Analysts billed Aurora as one of the most significant enterprise innovations from Amazon. Its enterprise data warehousing product, Amazon RedShift, is already popular among enterprises such as the Financial Times, Omnifone and Johnson & Johnson.

Independent IT analyst Greg Schulz said Aurora could be “a game-changer” as it makes relational database management easier and cheaper for enterprises.

Amazon is also adding more security, management and compliance features to its cloud services to lure more enterprises.

Easier encryption and compliance

Jassy launched Amazon Key Management service – a tool that provides one-click encryption and a centralised key management console, to give users visibility into their cloud use. It is aimed at making encryption and compliance easier for enterprises.

Among the security services available prior to the key management service, users could manage security on the cloud themselves, assign AWS to do it for them or use hardware security module (HSM) services.

“But all three options have challenges,” Jassy said. “When we manage security, users say they would like more control and visibility. When they manage it themselves, they find the process complex. And HSM services work great, but are very expensive.”

There has been a concerted effort from Amazon to become more enterprise-friendly

 Carl Brooks, 451 Research Group 

Enterprise cloud management

Jassy also launched AWS Config – a resource for service coding to help users get full visibility on all instances they have on AWS.

Among the other enterprise-friendly features Amazon launched at the re:Invent 2014 conference were a free application deployment service, called AWS CodeDeploy; a continuous test and build service, called AWS CodePipeline; and a tool to help users manage code repositories, called Amazon CodeCommit.

AWS CTO Werner Vogels demonstrated the company’s commitment to the enterprise by launching Amazon’s Docker-friendly container services; new, beefy Amazon EC2 instance types built on customised Intel Haswell processors; and AWS Lambda – a service to build and run applications in the cloud.

“There has been a concerted effort from Amazon to become more enterprise-friendly. They still remain the gold standard of the cloud and they have at least a year’s lead over the competition in innovation,” said Brooks.

AWS boasts one million active users, ranging from startups such as Spotify and Airbnb, to over 900 government agencies – such as the navy and intelligence security agencies – academic institutions and large enterprises.

Keeping EU data local

Some of the large, traditional enterprises using AWS include Shell, British Gas, Siemens, GE, Unilever, News Corporation, The Financial Times, Johnson and Johnson, Sun Corp, NYT, Pfizer, Vodafone, Samsung, Capgemini and European banking and insurance sector players.

To further build enterprises’ confidence, Amazon recently built a region with multiple datacentres in Frankfurt, to help users in the European Union (EU) keep data in local clouds.

“Our enterprise customers want to keep applications and data in the EU,” Jassy said at the launch of the Frankfurt facility. "Our business in Europe is growing so dramatically, it was time we added another region in the EU.”

For large, multi-national enterprises, the cost of IT is less of a worry. “What matters more is the ease of use, the reliability and security of the platforms, innovation from the providers and availability in multiple regions,” said IDC’s Carvalho.

“Amazon is understanding that now.”

Our aim is to make it easier for enterprises to use AWS

 Andy Jassy, AWS 

AWS warms to hybrid cloud approach

But one distinct shift experts noted in Amazon’s attitude to the cloud was the appreciation of a hybrid cloud approach – a far cry from its first re:Invent conference, when Jassy said the true benefits of the cloud can be realised only on a multi-tenanted public cloud platform.

For the first time, it showcased enterprises using AWS for hybrid IT. Johnson & Johnson collaborated with Amazon to run non-mission-critical workloads on the public cloud platform, placing more important workloads on Amazon’s Virtual Private Cloud (VPC) and retaining some legacy applications in its own datacentres.

“It is important to maintain operational control and visibility, yet make infrastructure elastic, seamless and ready to take advantage of software as a service (SaaS) and platform as a service (PaaS). Hence the hybrid environment," said CTO Dan Zalem.

For Johnson & Johnson – which operates in a highly regulated market – to trust AWS shows how enterprises can use public clouds for hybrid infrastructure, said Carvalho.

“Our aim is to make it easier for enterprises to use AWS,” Jassy said. But enterprises are moving to the cloud at different speeds. “While some are going all-in with the Amazon cloud, some are trialling with smaller workloads,” Jassy said.

“We want to make enterprises comfortable and our new services – including AWS CloudTrail, AWS Service Catalog, AWS Config – are all the result of conversations we have had with enterprise CIOs.”

“AWS Service Catalog is a really big deal,” said Owen Rogers, cloud economist at 451 Research. “It helps solve the enterprise organisational and procurement barriers to cloud adoption.”

Obstacles to cloud deployment

According to Jassy, cloud is "the new normal" and it is the biggest technology shift of our lifetime.

“But the biggest impediment for enterprises to move to the cloud is legacy IT. Certain applications in enterprises use very old technologies, such as mainframes," he said.

“A lot of work and investment has gone into building these on-premises IT and so I don’t disagree when enterprises decide not to move these apps to the cloud straight away.”

He also admits that, while there is no workload that is “inappropriate” for the cloud, there are some applications that require latency below one millisecond. “When we don’t have datacentres nearby to host those apps, then it may not work on the cloud.”

Amazon has developed broad capabilities to enable hybrid applications recently. It has the Virtual Private Cloud (VPC) where a part of its infrastructure is cordoned off for a user, to act as a private cloud. Then there is AWS Directory Service, which allows users to connect their AWS resources with an existing on-premises Microsoft Active Directory; and AWS DirectConnect – a private network connection for added security.

“We know that a lot of customers have done a lot of work on-premises, with VMware's vCenter tool and Microsoft's System Center tool, and so we allow them to use the same management tools to run in hybrid mode,” Jassy said.

Not all big enterprises across all the verticals have the ability or the vision to innovate like startups. AWS needs to spread the skills and play a role in changing the culture in enterprises

 Larry Carvalho, IDC 

Amazon’s future in the enterprise

While AWS is certainly speaking the enterprise language, there is still a long way to go, said Carvalho. 

“Currently, their enterprise customers include forward-thinking companies such as GE and Merck," he said, "but not all big enterprises across all the verticals have the ability or the vision to innovate like startups. AWS needs to spread the skills and play a role in changing the culture in enterprises."

“It needs to tell and prove to these enterprises that cloud is the new normal and it is an alternative way of attacking IT problems.”

But it lacks the sales force to reach out to more enterprises as Microsoft or IBM do, experts say. Gartner backed this with a poll that found 64% of Azure customers chose it because of their relationship with Microsoft. “Enterprises expect a lot of personal assistance and AWS does not have all the resources to fulfill that expectation – but it is beginning to make the effort.”

Another independent analyst, Janakiram MSV, agreed. “Re:Invent 2014 was certainly more enterprise-focused than the previous years – but there’s still a lot of room for growth," he said.

“They have not announced many services I was expecting. There was no email as a service, or file-sharing capabilities.”

Opportunities for growth

With most enterprise workloads moving to the cloud, one category that still mostly runs on-premises is email. Amazon has the opportunity to build a scalable email-hosting service on the cloud to replace Microsoft Exchange or IBM Lotus Domino. It could also launch a file-sharing service that will complement Amazon S3 and Amazon Zocalo file storage services.

“There is also potential for it to launch CRM as a service, similar to Salesforce.com,” Janakiram said. “All this will create further inroads in the enterprise market for AWS.”

Amazon’s pace of innovation is really fast, analyst Schulz said. In 2012, it added 159 features; in 2013 it added 280; and by the end of the re:Invent 2014 conference last week, AWS had added over 454 significant features and services since that start of the year.

“Amazon is speaking the language of the enterprise and business,” Schulz said. “Instead of saying, 'Learn our cloud language,' they are adapting themselves – and that is a big change.

According to Schulz, AWS is innovating in functionalities and innovating in taking it to the market and making it workable for users. “It is not just a tick in the box in terms of a service launched – it really makes it cost-effective and easy for enterprises to use.”

Amazon is in the cloud game for the long run and has its eyes as much on enterprises as on startups

 Greg Schulz, independent IT analyst 

AWS 'in for the long run'

In his keynote, Jassy said the company is trying to build business and customer relations that would “outlast all of us”. 

“We will not call you at the end of the quarter to sell you something to make up our numbers,” Jassy said.

One problem enterprises face is that their employees buy cloud services at a click of a button – and sometimes leave the instance running and the company paying for it. “We proactively reach out to our users to tell them where they can save and where instances are lying idle,” Jassy said. “We have sent 2.6 million notifications to save customers $350m.”

“Imagine what $350m could have done to its bottom line. This shows Amazon is in the cloud game for the long run and has its eyes as much on enterprises as on startups,” Schulz said.

As Gartner’s cloud expert Lydia Leong concludes, Amazon’s database engine could put middleware suppliers serving traditional enterprises on notice: “AWS is thinking hard about how to get into their business.”

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