No, Amazon Web Services is Not Dying as Articles Suggest

No, AWS is not struggling for its life as GigaOM suggests in its last article.

The popular online tech magazine put together different aspects of the actual cloud computing public market and connect them with the recent drop of revenues for AWS (a 3% drop). The final conclusion points out a though moment for AWS, with more competitors like Azure and Google that are trying to steal big customers from Amazon. Dropbox and AirBnB in the first line.

Even if it’s true that companies like Dropbox are looking for different solutions and, in some cases, are considering private and hybrid cloud solutions, what’s is nonsense in this article is considering such a small and simple case to say that AWS is struggling and is facing problems in its growth. We need some numbers to put this in context:

  • AWS has a 90% growth YoY in the last years.
  • The revenues drop is due mainly to the latest price cut. Amazon has regularly announced price cuts in the last years. A revenue drop is a normal consequence. It was more evident in this case because the price cut was particularly huge.
  • AWS has 5 times the computing capacity of other cloud computing IaaS competitors.
  • AWS has estimated revenues for more than 3 billions/year.

There are many ways to look at the problem, of course, but it is way too much considering AWS in a difficult situation.

A good article from TheRegister puts in perspective why Amazon could face problems in the near future because of its historical strategy of low margins and price cutting, something that now Google is using against AWS with Google Cloud Platform. If Amazon has a few competitors in the retails space that can beat the company, in the cloud computing industry it is going to fight with giants like Google and Microsoft, that have literally billions to spend and are not interested in a small market share.

Microsoft and other companies like IBM can’t afford a failure in this industry. If AWS is still a small part of Amazon, in terms of revenues and profits, for Microsoft or IBM, cloud computing is a mission with no fail option and that’s why they must take risks.

That said if we take a look at the evolution of AWS and at the state of the cloud computing industry, we can clearly see how Amazon is still a leader on the technology and partnerships front. There is no public cloud that today is comparable to AWS in terms of services and capabilities and looking at the ecosystem, Amazon is still the number one in terms of partners that are building and doing business inside its cloud platform.

What’s your opinion?

Stefano Bellasio

Written by

Stefano Bellasio

Stefano's a computer engineering guy that loves building products. He's the CEO and co-founder of CloudAcademy.com. All his experience is in the web hosting and cloud computing industry where he started other companies before. He loves talking with all readers of Cloud Academy blog, so feel free to email him at stefano@cloudacademy.com!


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