Amazon's heads in the cloud

Technology | Katherine Khashimova Long 22 Mar 2021

It enables glitch-free Netflix streaming. It hosts digital drug-design tools of the kind that led to Moderna's Covid-19 vaccine. Even The Seattle Times relies on it to make sure the website doesn't crash during surges of reader traffic.

What is it? It's Amazon Web Services.

The massively successful Amazon division, which opened for business 15 years ago, doesn't have the same consumer cachet as two-day shipping or Prime Video. "Cloud computing?" Gobbledygook to many.

Yet the importance of AWS is difficult to overstate.

The division is Amazon's cash cow, making up 59 percent of the company's US$22.9 billion (HK$178.62 billion) profit before interest and taxes in 2020, despite accounting for just 12 percent of Amazon's revenue.

AWS infrastructure also supports Amazon logistics, helping route more than 2.5 billion packages every year to the right address (most of the time), not to mention nearly all of Amazon's other operations.

On a wider scale, the launch of AWS revolutionized the economics of web-based business by creating a US$300 billion industry, cloud computing.

Amazon will elevate AWS CEO Andy Jassy to lead the company when founder Jeff Bezos steps down this year - a promotion that in part recognizes the centrality of cloud computing to Amazon's business model, industry observers say.

Microsoft CEO Satya Nadella also led Microsoft's cloud-computing division before acceding in 2014 to the top post at the Redmond-based software giant.

Meanwhile, AWS booting Parler offline in January over what Amazon has said is the social network's inability to moderate violent content has highlighted the tremendous sway cloud-computing platforms - including AWS, Microsoft's Azure and Google Cloud Platform - hold over their clients.

Cloud-computing services are "gateways," said University of Washington Information School professor Chirag Shah. "Without them, it's really hard to be alive as a business."

Amazon began putting the pieces of what would become AWS together in 2003. That summer, executives gathered for a retreat at Bezos' Medina manse to brainstorm new business directions for Amazon.

The company's strengths in the as-yet-unnamed world of cloud computing soon came to the fore.

Amazon was already offering limited software tools to developers and businesses. And it was good at building the digital infrastructure it needed to run its expanding enterprises.

Jassy proposed that Amazon start a new, 57-person division selling digital infrastructure. By autumn, AWS had been greenlighted, with him at its helm.

Jassy put his own mark on the organization. Not an engineer by trade, he has guided the development of new AWS services, former employees say, by nurturing an Amazonian culture of customer obsession.

In 2004, the division released test versions of what would become some of its foundational products. By 2006, AWS had officially opened for business.

AWS rolled out its first mass-market product, Simple Storage Service, or S3, on March 14, 2006.

Guided by senior technologist Allan Vermeulen's back-of-the-napkin blueprint, streamlined in a brainstorming session in a rented room at the Washington State Convention Center, and designed, Amazon chief technology officer Werner Vogels said, over the course of many "long, dark nights," S3 allows developers to store and retrieve "any amount of data, at any time, from anywhere on the web," the company wrote in its initial news release.

Within two months, the number of objects stored on S3 had exceeded Amazon developers' expectations by a factor of 100. Today, objects are stored on S3, an ocean of data underwriting advances in fields from weather forecasting and genomic research to advertising and facial recognition.

Within the year, Amazon had announced the other technology at the heart of Amazon Web Services: elastic compute, or EC2, giving developers access to on-demand computing power they could use to process and analyze data, among a host of other functions.

The dawn of cloud computing, heralded in a 2006 New York Times article proclaiming that the internet was "entering its Lego era," changed the economics of opening a computer-dependent business.

Early internet entrepreneurs likely spent 70 percent of their engineering time and effort building data centers and designing and maintaining basic infrastructure software, Vogels estimated, and only 30 percent of employee energy developing new products.

AWS flipped that ratio on its head.

Initially, customers needed only an e-mail address and a credit card to access data storage, computing power and database services, making it easier for people to start businesses online with a minimal infusion of capital. Backed by AWS, app-based startups like Lyft and Airbnb proliferated.

Amazon's head start has made it tough for rivals to catch up. Microsoft launched its cloud-computing division in 2010, followed by Google in 2011.

While AWS' early lead has shrunk in recent years, Amazon still dominates, commanding 31 percent of market share by revenue, compared with Microsoft's 20 percent and Google's 7 percent.

Since 2006, Amazon has rolled out hundreds of other AWS applications - so many, in fact, that even AWS engineers can't keep up, said Corey Quinn, the founder of AWS consultancy Duckbill Group.

"Even technically inclined people feel daunted by what this thing is," Quinn said. There are database management services, machine learning tools and web hosting. There are also tools to talk to satellites in orbit, a 3D race car simulator and an experimental quantum computing technology.

"Amazon is the Lego of the IT world," Vogels said. "We built very small building blocks. So it allowed developers to stack things together."

For years, AWS has built huge off-site data centers. But the future of AWS, Vogels said, is local. The company has launched a suite of hardware designed to bring AWS into users' homes and offices and out into the field where data collection is taking place.

Cloud services have not erased every computing frustration. For a product designed to give developers flexibility and choice, it's often difficult to migrate from one provider to another, Shah said.

"Your services are tangled with the AWS language. You're using special proprietary databases that AWS has," he said, using AWS as an example to describe problems common among cloud platforms.

"It's not easy to pack things up and go to a different service provider."

Meanwhile, the degree of power that cloud-computing titans hold over their customers, as evidenced by Amazon's decision to take Parler offline, is concerning, Shah said. "You're handing someone your entire business to run. Can you really trust them?"

Quinn, though, said it's unlikely that a cloud-computing provider like AWS would act against "any reasonable company."

Parler, he said, was very much an edge case.

After all, he said, "The National Enquirer attempted to blackmail Bezos and is still an AWS customer."

The Seattle Times (TNS)

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