Even as the cloud market booms, it's an open question whether there is room for anyone besides Amazon to benefit. Even as Microsoft dominated desktop computing over the past two decades, Amazon seems set to own the public cloud for years to come, notwithstanding attempts to circumvent its hegemony. With the next generation of startups building on Amazon, the industry is "Amazon all the way down", and perhaps for a very long time.
So should we love or hate Amazon?
Mark Suster, an investor with GRP Partners, believes Amazon has been a godsend to the startup world, in particular. As he writes, "Where open-source computing gave us a 90 per cent reduction in our software, Amazon gave us a 90 per cent reduction in our total operating costs." This isn't just a money thing, either: Amazon has made it dramatically easier to launch a service and to scale it.
Which is great, except for one thing: Amazon has a voracious appetite. As I heard from one prominent venture capitalist recently, "Two years ago Amazon was a blessing to startups. Today it is neutral. In two years it may well be a curse." How so? By building up Amazon Web Services to include many services currently offered by other vendors.
In a separate post, Suster acknowledges this risk, but posits that companies like RightScale have managed to innovate beyond Amazon's grasp. Perhaps. But for every RightScale there's a company that gets steamrollered by Amazon's ever-broadening AWS ambition: storage? S3. Database? SimpleDB. Payments? Flexible Payments Service. And so on.
If this sounds familiar, that's because it is. At one time Microsoft petrified VCs who refused to invest in the desktop giant's path. Anything that could conceivably be part of the operating system was essentially ceded to Microsoft, and not always to good effect. A lazy monopolist is hardly the best innovator.
Is Amazon the new Microsoft? Perhaps.
After all, AWS is arguably the world's new operating system, broadly defined. And just like Microsoft before it, Amazon is going to keep adding adjacent technologies to its core EC2 cloud computing service to make it the go-to cloud provider.
Not everyone is convinced, however. One VC I talked to pooh-poohed the notion that Amazon would prove a credible competitor outside its core Infrastructure-as-a-Service (IaaS) offering. Other commentators on Twitter suggested ways to diminish Amazon's cloud dominance. For example, analyst Krishnan Subramanian believes that federated clouds hold the answer.
In other words, if CIOs can efficiently stitch together disparate cloud resources - public and private - then Amazon becomes one component in a larger cloud ecosystem, and not necessarily the one-cloud-to-rule-them-all that it is today. It's an interesting thought, one echoed by developer Jon Cox, and one that is being tackled by at least one startup I've seen, which will launch its service in Q1. (Sorry, I'm under "friend-DA" on this one.)
But this strikes me as just the sort of thing that Amazon could enable, keeping itself as the hub of this federated cloud ecosystem. So long as all roads lead to Amazon, I doubt Amazon will mind to which alternative cloud providers the spokes lead.
Of course, it's possible that, as some suggest, Amazon's hegemony is isolated to one of the smaller components of the global cloud market, with the Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) markets being much larger.
But does this mean Amazon's largesse shouldn't bother us? I don't think so, for all the reasons Suster points out. Startups are founded on Amazon, not Salesforce or other PaaS/SaaS platforms. They may well decide to grow out of their EC2/S3 roots, but that then requires them to essentially build their own cloud.
Meanwhile, no one that is directly challenging Amazon in the public IaaS market has managed to chip away at its 90 per cent market share. And given the gargantuan costs associated with building out the infrastructure to compete with Amazon, few can be expected to do so. IDC analyst Al Gillen argues that unlike Microsoft, Amazon isn't doing anything that technically locks in customers, and he's right. Much like Google in search, Amazon's dominance is built on its provision of a quality service at very low cost.
But that's not really my point. I'm not suggesting that Amazon is doing anything wrong. In fact, I think its dominance is due to Amazon doing so much right.
Still, as an industry we may come to rue our over-reliance on one big public cloud infrastructure company. Just as we increasingly wince at Wal-Mart's dominance in consumer retail, we may well wish that Amazon had better competition in the cloud. Perhaps this is because of innovation lost (Microsoft stifled desktop innovation because there was no need to move the industry forward when the status quo was minting it billions of dollars), or simply because, as one VC told me, a cloud computing market dominated by one vendor is "really boring."
Your thoughts, please. Why haven't we seen a serious competitor in the IaaS space to Amazon? And is this cause for concern?
No comments yet.
Leave a comment
You must be logged in to post a comment.
Trackbacks are disabled.