A lot of people are saying the projecting out to 2020 is a ridiculous idea in fast moving industries like tech. But there's already a cliche that when AWS has an outage half of your favourite sites go down, and there's a reason for that - there is NO serious alternative to the AWS platform. They're years ahead of the little competition they have; no single other system does half of the things that AWS can. The scale of the engineering effort required to compete with AWS is enormous, and no-one's really trying it (except for components, like CDNs or S3 substitutes).
So I don't think it's that ridiculous - I can imagine Amazon one day being "that company that runs the internet, and also sells stuff".
> The scale of the engineering effort required to compete with AWS is enormous, and no-one's really trying
I would suggest that you're wildly misinformed. Not only AWS has plenty of competitors who're silently kicking their butt one area at a time, but even as pure cloud environments go, the value of virtualization continues to evaporate as hardware continues to grow faster than the population.
In other words, theoretically you'll be just able to purchase a single $5K DELL server in a few years and run an Airbnb-sized business on it. As the Moore's law keeps going, it's getting more and more insane for a start-up to invest so much of software fault-tolerance and scaling around AWS-style farms of barely alive virtualized servers from the 90s.
For a lot of businesses even today, a single Dell R720 with a Chef script makes a lot more sense (in terms of uptime, hosting bill and engineering efforts) than a small army of VPS boxes.
If you're not CPU-bound, if you don't need x100 spikes of compute, then you don't need to overpay for AWS-style elasticity, especially in terms of engineering that's required to get stable on it.
One server will never be enough. You need redundancy in case of a fire. Don't forget to optimize kernels, load balance, ensure security patches get applied, etc. I know I don't want that world, so I pay Google a measly amount to run App Engine for me and spin up new instances as my service needs them. I will be very surprised if the future is not bigger and better clouds.
Who would you say are the main AWS competitors today (at least in part)?
This isn't my specialty, but I suppose the list includes Microsoft's Windows Azure and the Google Cloud Platform. There are some open source efforts to watch as well, including OpenStack (backed by Rackspace and others). No doubt I've missed some.
There's plenty of time for those competitors to catch up to AWS by 2020.
>> There's plenty of time for those competitors to catch up to AWS by 2020.
Very true, but this fails to take into account that Amazon will not stay stagnant till 2020 for competitors to catch up.
Because Amazon already have a healthy majority of the users/marketshare, they are perhaps better positioned to understand and innovate upon the future needs of these customers, and keep building their product offerings by anticipating where the "puck is going to be."
With that said, nothing is set in stone, so competitors might as well overtake AWS by 2020, but if I had to bet my money, I'd bet it on Amazon.
Having majority of the marketshare in the marketplace is hardly the best breeding ground for innovation. That is when companies usually stagnate and entrench themselves.
I agree with you assessment, but as long as Jeff Bezos is able and leading the company, I am willing to bet on Amazon's dominance in it's core markets.
I think the biggest direct competitors are Rackspace, Windows Azure, Google Cloud, HP, and Dell. Indirectly, VMware and OpenStack are huge competitors too. Lots of companies are trying to decide how their existing infrastructure fits in with cloud computing, and the "private cloud" is one likely choice.
None of these have the wide product functionality that AWS has -- yet. Amazon has a multi-year head start on most of these companies, but as you mention, there's lots of time to make progress before 2020.
> So one day Jeff Bezos issued a mandate. He's doing that all the time, of course, and people scramble like ants being pounded with a rubber mallet whenever it happens. But on one occasion -- back around 2002 I think, plus or minus a year -- he issued a mandate that was so out there, so huge and eye-bulgingly ponderous, that it made all of his other mandates look like unsolicited peer bonuses...
Amazon's is based on an assumption that one day it will start to take profits, and big ones at that. Expanding into a service sector where it could have large profit margins (selling eBooks is another area) is integral to that.
But they're not predicting a single piece of tech, they're predicting the success of a platform, which is really Amazon's commitment and engineering capability. You can't predict what features AWS will have in 2-3 years, but you can predict that they'll take a large chunk of the hosting business and how much that is worth.
Bezos is committed to this, they have the head start and the engineering chops (or they can buy them in) so I'd say it is a fairly good bet.
Amazon will probably have some very strong competitors. For starters, there will be national-champion types, who will prosper due to geo-compliance issues if nothing else. (I.e., rules restricting cross-border data transfer.) Other security compliance will also matter, both pro- (strong enough security) and anti- (government back doors). OpenStack is currently an Amazon fast follower, but that's apt to change, with OpenStack getting some technical advantages as well. And OpenStack is likely to maintain the very big advantage you can move it among providers and hardware configurations, on-premise or off-.
One flaw with AWS-like businesses is lack of lock-in because of customer churn.
Web site popularity on the Internet obeys a power law distribution--the top sites take the lion's share of traffic and money from the Internet.
AWS will never see revenue from the post popular sites, because once a site grows past a certain size, it's cheaper to build redudancy and host themselves (Netflix, Facebook, etc.). AWS is actually fairly expensive for handling a large stream of traffic--it's only for intermittent use or cash-poor sites that the economics makes sense.
So AWS is full of very small to medium size operations, which are constantly popping in and out of existence. And when a small site pops into existence, it has no legacy cloud APIs to support, and can go with whatever cloud provider has the best offering at that time.
I seriously doubt this. Unintuitively, I think it's more likely that niche cloud services with specialized features will be able to compete better by exploiting industry-specific economies of scale that Amazon can't by being so generalized. Any of these companies that resist a buyout will have huge profit margins like Amazon doesn't.
So I don't think it's that ridiculous - I can imagine Amazon one day being "that company that runs the internet, and also sells stuff".