Why Adam Selipsky was the logical choice to run AWS

When AWS CEO Andy Jassy announced in an email to employees yesterday that Tableau CEO Adam Selipsky was returning to run AWS, it was probably not the choice most considered. But to the industry watchers we spoke to over the last couple of days, it was a move that made absolute sense once you thought about it.

Gartner analyst Ed Anderson says that the cultural fit was probably too good for Jassy to pass up. Selipsky spent 11 years helping build the division. It was someone he knew well and had worked side by side with for over a decade. He could slide into the new role and be trusted to continue building the lucrative division.

Anderson says that even though the size and scope of AWS has changed dramatically since Selipsky left in 2016 when the company closed the year on $16 billion run rate, he says that the organization’s cultural dynamics haven’t changed all that much.

“Success in this role requires a deep understanding of the Amazon/AWS culture in addition to a vision for AWS’s future growth. Adam already knows the AWS culture from his previous time at AWS. Yes, AWS was a smaller business when he left, but the fundamental structure and strategy was in place and the culture hasn’t notably evolved since then,” Anderson told me.

Matt McIlwain, managing director at Madrona Venture Group says the experience Selipsky had after he left AWS will prove invaluable when he returns.

“Adam transformed Tableau from a desktop, licensed software company to a cloud, subscription software company that thrived. As the leader of AWS, Adam is returning to a culture he helped grow as the sales and marketing leader that brought AWS to prominence and broke through from startup customers to become the leading enterprise solution for public cloud,” he said.

Holger Mueller, an analyst with Constellation Research says that Selipsky’s business experience gave him the edge over other candidates. “His business acumen won out over [internal candidates] Matt Garmin and Peter DeSantis. Insight on how Salesforce works may be helpful and valued as well,” Mueller pointed out.

As for leaving Tableau and with it Salesforce, the company that purchased it for $15.7 billion in 2019, Brent Leary, founder and principal analyst at CRM Essentials believes that it was only a matter of time before some of these acquired company CEOs left to do other things. In fact, he’s surprised it didn’t happen sooner.

“Given Salesforce’s growing stable of top notch CEOs accumulated by way of a slew of high profile acquisitions, you really can’t expect them all to stay forever, and given Adam Selipsky’s tenure at AWS before becoming Tableau’s CEO, this move makes a whole lot of sense. Amazon brings back one of their own, and he is also a wildly successful CEO in his own right,” Leary said.

While the consensus is that Selipsky is a good choice, he is going to have awfully big shoes to fill.  The fact is that division is continuing to grow like a large company currently on a run rate of over $50 billion. With a track record like that to follow, and Jassy still close at hand, Selipsky has to simply continue letting the unit do its thing while putting his own unique stamp on it.

Any kind of change is disconcerting though, and it will be up to him to put customers and employees at ease and plow ahead into the future. Same mission. New boss.


By Ron Miller

Tableau CEO Adam Selipsky is returning to AWS to replace Andy Jassy as CEO

When Amazon announced last month that Jeff Bezos was moving into the executive chairman role, and AWS CEO Andy Jassy would be taking over the entire Amazon operation, speculation began about who would replace Jassy.

People considered a number of internal candidates such as Peter DeSantis, vice president of global infrastructure at AWS and Matt Garman, who is vice president of sales and marketing. Not many would have chosen Tableau CEO Adam Selipsky, but sure enough he is returning home to run the division he left in 2016.

In an email to employees, Jassy wasted no time getting to the point that Selipsky was his choice, saying that the former employee who helped launch the division when they hired him 2005, spent 11 years helping Jassy build the unit before taking the job at Tableau. Through that lens, the the choice makes perfect sense.

“Adam brings strong judgment, customer obsession, team building, demand generation, and CEO experience to an already very strong AWS leadership team. And, having been in such a senior role at AWS for 11 years, he knows our culture and business well,” Jassy wrote in the email.

Jassy has run the AWS since its earliest days taking it from humble beginnings as a kind of internal experiment on running a storage web service to building a mega division currently on a $51 billion run rate. It is that juggernaut that will be Selipsky to run, but he seems well suited for the job.

He is a seasoned executive, and while he’s been away from AWS when it really began to grow, he still understands the culture well enough to step smoothly into the role.  At the same, he’s leaving Tableau, a company he helped transform from a desktop software company into one firmly in the cloud.

Salesforce bought Tableau in June 2019 for a cool $15.7 billion and Selipsky has remained at the helm since then, but perhaps the lure of running AWS was too great and he decided to take the leap to the new job.

When we wrote a story at the end of last year about Salesforce’s deep bench of executive talent one of the CEOs we pointed at as a possible replacement was Selipsky. But with it looking more like president and COO Bret Taylor would be the heir apparent, perhaps Selipsky was ready for a new challenge.

Selipsky will make his return to AWS on May 17th and spend a few weeks with Jassy in a transitional time before taking over to run the division on his own. As Jassy slides into the Amazon CEO role, it’s clear the two will continue to work closely together, just like they did all those years ago.


By Ron Miller

Is overseeing cloud operations the new career path to CEO?

When Amazon announced last week that founder and CEO Jeff Bezos planned to step back from overseeing operations and shift into an executive chairman role, it also revealed that AWS CEO Andy Jassy, head of the company’s profitable cloud division, would replace him.

As Bessemer partner Byron Deeter pointed out on Twitter, Jassy’s promotion was similar to Satya Nadella’s ascent at Microsoft: in 2014, he moved from executive VP in charge of Azure to the chief exec’s office. Similarly, Arvind Krishna, who was promoted to replace Ginni Rometti as IBM CEO last year, also was formerly head of the company’s cloud business.

Could Nadella’s successful rise serve as a blueprint for Amazon as it makes a similar transition? While there are major differences in the missions of these companies, it’s inevitable that we will compare these two executives based on their former jobs. It’s true that they have an awful lot in common, but there are some stark differences, too.

Replacing a legend

For starters, Jassy is taking over for someone who founded one of the world’s biggest corporations. Nadella replaced Steve Ballmer, who had taken over for the company’s face, Bill Gates. Holger Mueller, an analyst at Constellation Research, says this notable difference could have a huge impact for Jassy with his founder boss still looking over his shoulder.

“There’s a lot of similarity in the two situations, but Satya was a little removed from the founder Gates. Bezos will always hover and be there, whereas Gates (and Ballmer) had retired for good. [ … ] It was clear [they] would not be coming back. [ … ] For Jassy, the owner could [conceivably] come back anytime,” Mueller said.

But Andrew Bartels, an analyst at Forrester Research, says it’s not a coincidence that both leaders were plucked from the cloud divisions of their respective companies, even if it was seven years apart.

“In both cases, these hyperscale business units of Microsoft and Amazon were the fastest-growing and best-performing units of the companies. [ … ] In both cases, cloud infrastructure was seen as a platform on top of which and around which other cloud offerings could be developed,” Bartels said. The companies both believe that the leaders of these two growth engines were best suited to lead the company into the future.


By Ron Miller

What Andy Jassy’s promotion to Amazon CEO could mean for AWS

Blockbuster news struck late this afternoon when Amazon announced that Jeff Bezos would be stepping back as CEO of Amazon, the company he built from a business in his garage to worldwide behemoth. As he takes on the role of executive chairman, his replacement will be none other than AWS CEO Andy Jassy.

With Jassy moving into his new role at the company, the immediate question is who replaces him to run AWS. Let the games begin. Among the names being tossed about in the rumor mill are Peter DeSantis, vice president of global infrastructure at AWS and Matt Garman, who is Vice President of sales and marketing. Both are members of Bezos’ elite executive team known as the S-team and either would make sense as Jassy’s successor. Nobody knows for sure though, and it could be any number of people inside the organization, or even someone from outside. (We have asked Amazon PR to provide clarity on the successor, but as of publication we had not heard from them.)

Holger Mueller, a senior analyst at Constellation Research, says that Jassy is being rewarded for doing a stellar job raising AWS from a tiny side business to one on a $50 billion run rate. “On the finance side it makes sense to appoint an executive who intimately knows Amazon’s most profitable business, that operates in more competitive markets. [Appointing Jassy] ensures that the new Amazon CEO does not break the ‘golden goose’,” Mueller told me.

Alex Smith, VP of channels, who covers the cloud infrastructure market at analyst firm Canalys, says the writing has been on the wall that a transition was in the works. “This move has been coming for some time. Jassy is the second most public-facing figure at Amazon and has lead one of its most successful business units. Bezos can go out on a high and focus on his many other ventures,” Smith said.

Smith adds that this move should enhance AWS’s place in the organization. “I think this is more of an AWS gain, in terms of its increasing strategic importance to Amazon going forwards, rather than loss in terms of losing Andy as direct lead. I expect he’ll remain close to that organization.”

Ed Anderson, a Gartner analyst also sees Jassy as the obvious choice to take over for Bezos. “Amazon is a company driven by technology innovation, something Andy has been doing at AWS for many years now. Also, it’s worth noting that Andy Jassy has an impressive track record of building and running a very large business. Under Andy’s leadership, AWS has grown to be one of the biggest technology companies in the world and one of the most impactful in defining what the future of computing will be,” Anderson said.

In the company earnings report released today, AWS came in at $12.74 billion for the quarter up 28% YoY from $9.60 billion a year ago. That puts the company on an elite $50 billion run rate. No other cloud infrastructure vendor, even the mighty Microsoft, is even close in this category. Microsoft stands at around 20% marketshare compared to AWS’s approximately 33% market share.

It’s unclear what impact the executive shuffle will have on the company at large or AWS in particular. In some ways it feels like when Larry Ellison stepped down as CEO of Oracle in 2014 to take on the exact same executive chairman role. While Safra Catz and Mark Hurd took over at co-CEOs in that situation, Ellison has remained intimately involved with the company he helped found. It’s reasonable to assume that Bezos will do the same.

With Jassy, the company is getting a man who has risen through the ranks since joining the company in 1997 after getting an undergraduate degree and an MBA from Harvard. In 2002 he became VP/ technical assistant, working directly under Bezos. It was in this role that he began to see the need for a set of common web services for Amazon developers to use. This idea grew into AWS and Jassy became a VP at the fledgling division working his way up until he was appointed CEO in 2016.


By Ron Miller

AWS adds natural language search service for business intelligence from its data sets

When Amazon Web Services launched QuickSight, its business intelligence service, back in 2016 the company wanted to provide product information and customer information for business users — not just developers.

At the time, the natural language processing technologies available weren’t robust enough to give customers the tools to search databases effectively using queries in plain speech.

Now, as those technologies have matured, Amazon is coming back with a significant upgrade called QuickSight Q, which allows users to just ask a simple question and get the answers they need, according to Andy Jassy’s keynote at AWS re:Invent.

“We will provide natural language to provide what we think the key learning is,” said Jassy. “I don’t like that our users have to know which databases to access or where data is stored. I want them to be able to type into a search bar and get the answer to a natural language question.

That’s what QuickSight Q aims to do. It’s a direct challenge to a number of business intelligence startups and another instance of the way machine learning and natural language processing are changing business processes across multiple industries.

“The way Q works. Type in a question in natural language [like]… ‘Give me the trailing twelve month sales of product X?’… You get an answer in seconds. You don’t have to know tables or have to know data stores.”

It’s a compelling use case and gets at the way AWS is integrating machine learning to provide more no-code services to customers. “Customers didn’t hire us to do machine learning,” Jassy said. “They hired us to answer the questions.”


By Jonathan Shieber

AWS announces DevOps Guru to find operational issues automatically

At AWS re:Invent today, Andy Jassy announced DevOps Guru, a new tool for DevOps teams to help the operations side find issues that could be having an impact on an application performance. Consider it like the sibling of CodeGuru, the service the company announced last year to find issues in your code before you deploy.

It works in a similar fashion using machine learning to find issues on the operations side of the equation. “I’m excited to launch a new service today called Amazon DevOps Guru, which is a new service that uses machine learning to identify operational issues long before they impact customers,” Jassy said today.

The way it works is that it collects and analyzes data from application metrics, logs, and events “to identify behavior that deviates from normal operational patterns,” the company explained in the blog post announcing the new service.

This service essentially gives AWS a product that would be competing with companies like Sumo Logic, DataDog or Splunk by providing deep operational insight on problems that could be having an impact on your application such as misconfigurations or resources that are over capacity.

When it finds a problem, the service can send an SMS, Slack message or other communication to the team and provides recommendations on how to fix the problem as quickly as possible.

What’s more, you pay for the data analyzed by the service, rather than a monthly fee. The company says this means that there is no upfront cost or commitment involved.


By Ron Miller

Slack’s new integration deal with AWS could also be about tweaking Microsoft

Slack and Amazon announced a big integration late yesterday afternoon. As part of the deal, Slack will use Amazon Chime for its call feature, while reiterating its commitment to use AWS as its preferred cloud provider to run its infrastructure. At the same time, AWS has agreed to use Slack for internal communications.

Make no mistake, this is a big deal as the SaaS communications tool increases its ties with AWS, but this agreement could also be about slighting Microsoft and its rival Teams product by making a deal with a cloud rival. In the past Slack CEO Stewart Butterfield has had choice words for Microsoft saying the Redmond technology giant sees his company as an “existential threat.”

Whether that’s true or not — Teams is but one piece of a huge technology company — it’s impossible not to look at the deal in this context. Aligning more deeply with AWS sends a message to Microsoft, whose Azure infrastructure services compete with AWS.

Butterfield didn’t say that of course. He talked about how synergistic the deal was. “Strategically partnering with AWS allows both companies to scale to meet demand and deliver enterprise-grade offerings to our customers. By integrating AWS services with Slack’s channel-based messaging platform, we’re helping teams easily and seamlessly manage their cloud infrastructure projects and launch cloud-based services without ever leaving Slack,” he said in a statement

The deal also includes several other elements including integrating AWS Key Management Service with Slack Enterprise Key Management (EKM) for encryption key management, deeper alignment with AWS’s chatbot service and direct integration with AWS AppFlow to enable secure transfer of data between Slack and Amazon S3 storage and the Amazon Redshift data warehouse.

AWS CEO Andy Jassy saw it as a pure integration play. “Together, AWS and Slack are giving developer teams the ability to collaborate and innovate faster on the front end with applications, while giving them the ability to efficiently manage their backend cloud infrastructure,” Jassy said in a statement.

Like any good deal, it’s good for both sides. Slack gets a big customer in AWS and AWS now has Slack directly integrating more of its services. One of the reasons enterprise users are so enamored with Slack is the ability to get work done in a single place without constantly have to change focus and move between interfaces.

This deal will provide more of that for common customers, while tweaking a common rival. That’s what you call win-win.


By Ron Miller

In spite of pandemic (or maybe because of it), cloud infrastructure revenue soars

It’s fair to say that even before the impact of COVID-19, companies had begun a steady march to the cloud. Maybe it wasn’t fast enough for AWS, as Andy Jassy made clear in his 2019 Re:invent keynote, but it was happening all the same and the steady revenue increases across the cloud infrastructure market bore that out.

As we look at the most recent quarter’s earnings reports for the main players in the market, it seems the pandemic and economic fall out has done little to slow that down. In fact, it may be contributing to its growth.

According to numbers supplied by Synergy Research, the cloud infrastructure market totaled $29 billion in revenue for Q12020.

Image Credit: Synergy Research

Synergy’s John Dinsdale, who has been watching this market for a long time, says that the pandemic could be contributing to some of that growth, at least modestly. In spite of the numbers, he doesn’t necessarily see these companies getting out of this unscathed either, but as companies shift operations from offices, it could be part of the reason for the increased demand we saw in the first quarter.

“For sure, the pandemic is causing some issues for cloud providers, but in uncertain times, the public cloud is providing flexibility and a safe haven for enterprises that are struggling to maintain normal operations. Cloud provider revenues continue to grow at truly impressive rates, with AWS and Azure in aggregate now having an annual revenue run rate of well over $60 billion,” Dinsdale said in a statement.

AWS led the way with a third of the market or more than $10 billion in quarterly revenue as it continues to hold a substantial lead in market share. Microsoft was in second, growing at a brisker 59% for 18% of the market. While Microsoft doesn’t break out its numbers, using Synergy’s numbers, that would work out to around $5.2 billion for Azure revenue. Meanwhile Google came in third with $2.78 billion.

If you’re keeping track of market share at home, it comes out to 32% for AWS, 18% for Microsoft and 8% for Google. This split has remained fairly steady, although Microsoft has managed to gain a few percentage points over the last several quarters as its overall growth rate outpaces Amazon.


By Ron Miller

AWS hits $10B for the quarter putting it on a $40B run rate

AWS, the cloud arm of Amazon would be a pretty successful business on its own. Today, the company announced it has passed $10 billion for the quarter, putting the cloud business on an impressive run rate of more than $40 billion.

It was a bright spot for the company in an earnings report that saw it report net income of $2.5 billion, down a $1 billion from a year ago.

Still, most companies would take that for the entire business, but AWS, which started off as kind of a side hustle for Amazon back in 2006 has grown into a powerful business all on its own. With a growth rate of 33%, it’s still growing briskly, even if it’s slowing down a bit as the law of large numbers begins to work against it.

Even though Microsoft has grown more quickly — in yesterday’s report Microsoft reported that Azure was growing at 59% clip — AWS had such a big head start and controls a big chunk of the market share.

To give you a sense of how quickly this business has grown, Bloomberg’s Jon Erlichman tweeted the Q1 numbers for AWS since 2014 and it’s pretty amazing growth:

In 2014, it was a $4 billion a year business. Today it is 9.1x that and still going strong. The good news for everyone involved is that this is a huge market, and while nobody could ever characterize the pandemic and it’s economic fall-out as good news for anyone, the fact is that is forcing companies to move to the cloud faster than they might have wanted to go.

That should bode well for all the cloud infrastructures vendors, even as the economy shrinks, the kinds of services these vendors offer should be in more demand than ever, and that means these numbers are could just going to keep growing for some time.


By Ron Miller

DoD Inspector General report finds everything was basically hunky-dory with JEDI cloud contract bid

While controversy has dogged the $10 billion, decade-long JEDI contract since its earliest days, a report by the DoD’s Inspector General’s Office concluded today that, while there were some funky bits and potential conflicts, overall the contract procurement process was fair and legal and  the president did not unduly influence the process in spite of public comments.

There were a number of issues along the way about whether the single contractor award was fair or reasonable, about whether there were was White House influence on the decision, and whether the president wanted to prevent Amazon founder Jeff Bezos, who also owns the Washington Post, from getting the contract.

There were questions about whether certain personnel, who had been or were about to be Amazon employees, had undue influence on the contents of the RFP or if former Secretary of Defense showed favor to Amazon, which ultimately did not even win the contract, and that one of Mattis’ under secretaries, in fact, owned stock in Microsoft .

It’s worth noting that the report states clearly that it is not looking at the merits of this contract award or whether the correct company won on technical acumen. It was looking at all of these controversial parts came up throughout the process. As the report stated:

“In this report, we do not draw a conclusion regarding whether the DoD appropriately awarded the JEDI Cloud contract to Microsoft rather than Amazon Web Services. We did not assess the merits of the contractors’ proposals or DoD’s technical or price evaluations; rather we reviewed the source selection process and determined that it was in compliance with applicable statutes, policies, and the evaluation process described in the Request for Proposals.”

Although the report indicates that the White House would not cooperate with the investigation into potential bias, the investigators claim they had enough discussions with parties involved with the decision to conclude that there was no undue influence on the White House’s part:

“However, we believe the evidence we received showed that the DoD personnel who evaluated
the contract proposals and awarded Microsoft the JEDI Cloud contract were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House,” the report stated.

The report chose to blame the media instead, at least for partly giving the impression that the White House had influenced the process, stating:

“Yet, these media reports, and the reports of President Trump’s statements about Amazon, ongoing bid protests and “lobbying” by JEDI Cloud competitors, as well as inaccurate media reports about the JEDI Cloud procurement process, may have created the appearance or perception that the contract award process was not fair or unbiased.”

It’s worth noting that we reported that AWS president Andy Jassy made it clear in a press conference at AWS re:Invent in December that the company believed the president’s words had influenced the process.

“I think that we ended up with a situation where there was political interference. When you have a sitting president, who has shared openly his disdain for a company, and the leader of that company, it makes it really difficult for government agencies, including the DoD, to make objective decisions without fear of reprisal.”

As for other points of controversy, such as those previously referenced biases, all were found lacking by the Inspector General. While the earliest complaints from Oracle and others were that Deap Ubhi and Victor Gavin, two individuals involved in drafting the RFP, failed to disclose they were offered jobs by Amazon during that time.

The report concluded that while Ubhi violated ethics rules, his involvement wasn’t substantial enough to influence the RFP (which again, Amazon didn’t win). “However, we concluded that Mr. Ubhi’s brief early involvement in the JEDI Cloud Initiative was not substantial and did not provide any advantage to his prospective employer, Amazon…,” the report stated.

The report found Gavin did not violate any ethics rules in spite of taking a job with Amazon because he had disqualified himself from the process, nor did the report find that former Secretary Mattis had any ethical violations in its investigation.

One final note: Stacy Cummings, Principal Deputy Assistant Secretary of Defense for Acquisition and Deputy Assistant Secretary of Defense for Acquisition Enablers, who worked for Mattis, owned some stock in Microsoft and did not disclose this. While the report found that was a violation of ethics guidelines, it ultimately concluded this did not unduly influence the award to Microsoft.

While the report is a substantial, 313 pages, it basically concludes that as far as the purview of the Inspector General is concerned, the process was basically conducted in a fair way. The court case, however involving Amazon’s protest of the award to Microsoft continues. And the project remains on hold until that is concluded.

Note: Microsoft and Amazon did not respond to requests from TechCrunch for comments before we published this article. If that changes, we will update accordingly.

Report on the Joint Enterprise Defense Infrastructure (Jedi) Cloud Procurement Dodig-2020-079 by TechCrunch on Scribd


By Ron Miller

Big opening for startups that help move entrenched on-prem workloads to the cloud

AWS CEO Andy Jassy showed signs of frustration at his AWS re:Invent keynote address in December.

Customers weren’t moving to the cloud nearly fast enough for his taste, and he prodded them to move along. Some of their hesitation, as Jassy pointed out, was due to institutional inertia, but some of it also was due to a technology problem related to getting entrenched, on-prem workloads to the cloud.

When a challenge of this magnitude presents itself and you have the head of the world’s largest cloud infrastructure vendor imploring customers to move faster, you can be sure any number of players will start paying attention.

Sure enough, cloud infrastructure vendors (ISVs) have developed new migration solutions to help break that big data logjam. Large ISVs like Accenture and Deloitte are also happy to help your company deal with migration issues, but this opportunity also offers a big opening for startups aiming to solve the hard problems associated with moving certain workloads to the cloud.

Think about problems like getting data off of a mainframe and into the cloud or moving an on-prem data warehouse. We spoke to a number of experts to figure out where this migration market is going and if the future looks bright for cloud-migration startups.

Cloud-migration blues

It’s hard to nail down exactly the percentage of workloads that have been moved to the cloud at this point, but most experts agree there’s still a great deal of growth ahead. Some of the more optimistic projections have pegged it at around 20%, with the U.S. far ahead of the rest of the world.


By Ron Miller

Amazon wants to depose president and secretary of Defense as part of JEDI protest

Today, AWS made public its Motion to Supplement the Record in its protest of the JEDI contract decision. As part of that process, the company has announced it wants to depose President Trump and Secretary of Defense Mark Esper.

When Amazon announced at the end of last year that it was protesting the DoD’s decision to award the $10 billion, decade-long JEDI contract to Microsoft, the company made clear that it was not happy with the decision. The company believes that the president steered the contract away from Amazon because of personal political differences with Amazon CEO Jeff Bezos, who also owns The Washington Post.

“President Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to interfere with government functions – including federal procurements – to advance his personal agenda. The preservation of public confidence in the nation’s procurement process requires discovery and supplementation of the administrative record, particularly in light of President Trump’s order to ‘screw Amazon.’ The question is whether the President of the United States should be allowed to use the budget of the DoD to pursue his own personal and political ends,” an AWS spokesperson said in a statement.

This is consistent with public statements the company has been making since the DoD made the surprise decision in October to go with Microsoft. It had been widely believed that Amazon would win the contract, and there was much wrangling and complaining throughout the procurement process that the contract had been designed to favor Amazon, something that the DoD repeatedly denied.

At AWS re:Invent at the end last year, AWS CEO Andy Jassy made it clear he was unhappy with the decision and that he believed the president showed bias. “I think that we ended up with a situation where there was political interference. When you have a sitting president, who has shared openly his disdain for a company, and the leader of that company, it makes it really difficult for government agencies, including the DoD, to make objective decisions without fear of reprisal,” Jassy said last year.

Sources say that the DoD gave Amazon a written debriefing after the decision to award the contract to Microsoft, but the company is particularly upset that the department has failed to respond in a timely fashion to requests for additional information and questions, as required by law.


By Ron Miller

Despite JEDI loss, AWS retains dominant market position

AWS took a hard blow last year when it lost the $10 billion, decade-long JEDI cloud contract to rival Microsoft. Yet even without that mega deal for building out the nation’s Joint Enterprise Defense Infrastructure, the company remains fully in control of the cloud infrastructure market — and it intends to fight that decision.

In fact, AWS still owns almost twice as much cloud infrastructure market share as Microsoft, its closest rival. While the two will battle over the next decade for big contracts like JEDI, for now, AWS doesn’t have much to worry about.

There was a lot more to AWS’s year than simply losing JEDI. Per usual, the news came out with a flurry of announcements and enhancements to its vast product set. Among the more interesting moves was a shift to the edge, the fact the company is getting more serious about the chip business and a big dose of machine learning product announcements.

The fact is that AWS has such market momentum now, it’s a legitimate question to ask if anyone, even Microsoft, can catch up. The market is continuing to expand though, and the next battle is for that remaining market share. AWS CEO Andy Jassy spent more time than in the past trashing Microsoft at 2019’s re:Invent customer conference in December, imploring customers to move to the cloud faster and showing that his company is preparing for a battle with its rivals in the years ahead.

Numbers, please

AWS closed 2019 on a $36 billion run rate, growing from $7.43 billion in in its first report in January to $9 billion in earnings for its most recent earnings report in October. Believe it or not, according to CNBC, that number failed to meet analysts expectations of $9.1 billion, but still accounted for 13% of Amazon’s revenue in the quarter.

Regardless, AWS is a juggernaut, which is fairly amazing when you consider that it started as a side project for Amazon .com in 2006. In fact, if AWS were a stand-alone company, it would be a substantial business. While growth slowed a bit last year, that’s inevitable when you get as large as AWS, says John Dinsdale, VP, chief analyst and general manager at Synergy Research, a firm that follows all aspects of the cloud market.

“This is just math and the law of large numbers. On average over the last four quarters, it has incremented its revenues by well over $500 million per quarter. So it has grown its quarterly revenues by well over $2 billion in a twelve-month period,” he said.

Dinsdale added, “To put that into context, this growth in quarterly revenue is bigger than Google’s total revenues in cloud infrastructure services. In a very large market that is growing at over 35% per year, AWS market share is holding steady.”

Dinsdale says the cloud infrastructure market didn’t quite break $100 billion last year, but even without full Q4 results, his firm’s models project a total of around $95 billion, up 37% over 2018. AWS has more than a third of that. Microsoft is way back at around 17% with Google in third with around 8 or 9%.

While this is from Q1, it illustrates the relative positions of companies in the cloud market. Chart: Synergy Research

JEDI disappointment

It would be hard to do any year-end review of AWS without discussing JEDI. From the moment the Department of Defense announced its decade-long, $10 billion cloud RFP, it has been one big controversy after another.


By Ron Miller

New Synergy Research report finds enterprise data center market is strong for now

Conventional wisdom would suggest that in 2019, the public cloud dominates and enterprise data centers are becoming an anachronism of a bygone era, but new data from Synergy Research finds that the enterprise data center market had a growth spurt last year.

In fact, Synergy reported that overall spending in enterprise infrastructure, which includes elements like servers, switches and routers and network security; grew 13 percent last year and represents a $125 billion business — not too shabby for a market that is supposedly on its deathbed.

Overall these numbers showed that market is still growing, although certainly not nearly as fast the public cloud. Synergy was kind enough to provide a separate report on the cloud market, which grew 32 percent last year to $250 billion annually.

As Synergy analyst John Dinsdale, pointed out, the private data center is not the only buyer here. A good percentage of sales is likely going to the public cloud, who are building data centers at a rapid rate these days. “In terms of applications and levels of usage, I’d characterize it more like there being a ton of growth in the overall market, but cloud is sucking up most of the growth, while enterprise or on-prem is relatively flat,” Dinsdale told TechCrunch.

 

 

Perhaps the surprising data nugget in the report is that Cisco remains the dominant vendor in this market with 23 percent share over the last four quarters. This, even as it tries to pivot to being more of a software and services vendor, spending billions on companies such as AppDynamics, Jasper Technologies and Duo Security in recent years. Yet data still shows that it still dominating in the traditional hardware sector.

Cisco remains the top vendor in the category in spite of losing a couple of percentage points in marketshare over the last year, primarily due to the fact they don’t do great in the server part of the market, which happens to be the biggest overall slice. The next vendor, HPE, is far back at just 11 percent across the six segments.

While these numbers show that companies are continuing to invest in new hardware, the growth is probably not sustainable long term. At AWS Re:invent in November, AWS president Andy Jassy pointed out that a vast majority of data remains in private data centers, but that we can expect that to begin to move more briskly to the public cloud over the next five years. And web scale companies like Amazon often don’t buy hardware off the shelf, opting to develop custom tools they can understand and configure at a highly granular level.

Jassy said that outside the US, companies are one to three years behind this trend, depending on the market, so the shift is still going on, as the much bigger growth in the public cloud numbers indicates.


By Ron Miller

AWS wants to rule the world

AWS, once a nice little side hustle for Amazon’s eCommerce business, has grown over the years into a behemoth that’s on a $27 billion run rate, one that’s still growing at around 45 percent a year. That’s a highly successful business by any measure, but as I listened to AWS executives last week at their AWS re:Invent conference in Las Vegas, I didn’t hear a group that was content to sit still and let the growth speak for itself. Instead, I heard one that wants to dominate every area of enterprise computing.

Whether it was hardware like the new Inferentia chip and Outposts, the new on-prem servers or blockchain and a base station service for satellites, if AWS saw an opportunity they were not ceding an inch to anyone.

Last year, AWS announced an astonishing1400 new features, and word was that they are on pace to exceed that this year. They get a lot of credit for not resting on their laurels and continuing to innovate like a much smaller company, even as they own gobs of marketshare.

The feature inflation probably can’t go on forever, but for now at least they show no signs of slowing down, as the announcements came at a furious pace once again. While they will tell you that every decision they make is about meeting customer needs, it’s clear that some of these announcements were also about answering competitive pressure.

Going after competitors harder

In the past, AWS kept criticism of competitors to a minimum maybe giving a little jab to Oracle, but this year they seemed to ratchet it up. In their keynotes, AWS CEO Andy Jassy and Amazon CTO Werner Vogels continually flogged Oracle, a competitor in the database market, but hardly a major threat as a cloud company right now.

They went right for Oracle’s market though with a new on prem system called Outposts, which allows AWS customers to operate on prem and in the cloud using a single AWS control panel or one from VMware if customers prefer. That is the kind of cloud vision that Larry Ellison might have put forth, but Jassy didn’t necessarily see it as going after Oracle or anyone else. “I don’t see Outposts as a shot across the bow of anyone. If you look at what we are doing, it’s very much informed by customers,” he told reporters at a press conference last week.

AWS CEO Andy Jassy at a press conference at AWS Re:Invent last week.

Yet AWS didn’t reserve its criticism just for Oracle. It also took aim at Microsoft, taking jabs at Microsoft SQL Server, and also announcing Amazon FSx for Windows File Server, a tool specifically designed to move Microsoft files to the AWS cloud.

Google wasn’t spared either when launching Inferentia and Elastic Inference, which put Google on notice that AWS wasn’t going to yield the AI market to Google’s TPU infrastructure. All of these tools and much more were about more than answering customer demand, they were about putting the competition on notice in every aspect of enterprise computing.

Upward growth trajectory

The cloud market is continuing to grow at a dramatic pace, and as market leader, AWS has been able to take advantage of its market dominance to this point. Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy says that AWS has been using its market position to keep expanding into different areas.

“AWS has the scale right now to do many things others cannot, particularly lesser players like Google Cloud Platform and Oracle Cloud. They are trying to make a point with the thousands of new products and features they bring out. This serves as a disincentive longer-term for other players, and I believe will result in a shakeout,” he told TechCrunch.

As for the frenetic pace of innovation, Moorhead believes it can’t go on forever. “To me, the question is, when do we reach a point where 95% of the needs are met, and the innovation rate isn’t required. Every market, literally every market, reaches a point where this happens, so it’s not a matter of if but when,” he said.

Certainly areas like the AWS Ground Station announcement, showed that AWS was willing to expand beyond the conventional confines of enterprise computing and into outer space to help companies process satellite data. This ability to think beyond traditional uses of cloud computing resources shows a level of creativity that suggests there could be other untapped markets for AWS that we haven’t yet imagined.

As AWS moves into more areas of the enterprise computing stack, whether on premises or in the cloud, they are showing their desire to dominate every aspect of the enterprise computing world, and last week they demonstrated that there is no area that they are willing to surrender to anyone.

more AWS re:Invent 2018 coverage


By Ron Miller