Which Amazon Are You Chasing?


A Lesson From History

I aAOLm old enough to remember a time when America Online (AOL) was the leader in providing online services and Steve Case, the founder and CEO of AOL, was considered a visionary in the burgeoning digital economy.  His vision for online media and entertainment propelled AOL to a place where they could engineer a merger with “old” media conglomerate, Time Warner.  However, AOL-Time Warner did not become the media king that Case had convinced many analysts and investors the combined companies would become.  What happened to AOL?  Among other things, they failed to understand the full impact of the Internet and its ability to open-source information and entertainment.  Case and AOL-Time Warner tried to rally back but were unable to innovate or to differentiate themselves from competitors who had embraced the openness of the Internet.  Instead AOL chose unsuccessfully to continue down the proprietary content provider path.steve case

AOL is a classic example of what happens when a vendor chases from behind and do not have the foresight to try to innovate past their competitors.  Today, I see similar mistakes being made in the Cloud Computing space as providers and vendors announce their intentions to take on Amazon Web Services (AWS) in the Infrastructure-as-a-Service (IaaS) Public Cloud space.  The question is which Amazon Web Services are they chasing?

Chasing Yesteryear

I’ve had the opportunity to speak with different Cloud providers and vendors and it’s become increasingly clear that much of what passes for Public Cloud offerings are not true Cloud offerings.  I recently spoke with a provider who bragged about the Public Cloud they have been selling for years; after getting some details, it became clear that what this provider was offering a very large virtual machine hosting business.  Now, this offering was delivering value to this provider’s customers in terms of consolidation but this “public cloud” did not have any automation, elasticity, or self-service.  As others have said, “It ain’t a Cloud just because you call it that.”

Increasingly, more “cloud” providers and vendors are calling their virtualized or converged infrastructures a Cloud when there are little or no services offered beyond basic server virtualization and resource management.  These same providers and vendors claim they have either built and/or enabled others to build their own AWS-like Cloud.  To make such a claim, they are either “Cloud-washing,” not understanding what AWS offers, or are stuck in the Cloud Computing world of 2008.

Below is a slide showing the services that AWS offered 5 years ago:

Screen Shot 2013-03-27 at 12.10.09 PM

Contrast this with what AWS offers today:


This doesn’t even include more recent added services such as DynamoDB and Redshift.  Beyond the sheer volume of services added, note how many of these services are targeted at allowing developers to write and deploy application quickly and easily.  I regularly attend AWS User Group meeting and while pricing is always important, the other compelling reason for the adoption of AWS are the services they offer.  It is no longer just about spinning up some machines on-demand and paying for it with a credit card.

So You Want To Compete with Amazon

Anyone who wants to compete with AWS, rather they are Google, VMware, or a regional Cloud provider, and try to do so based primarily on price, will ultimately lose.  Few companies can leverage the economies of scale that Amazon does to drive down the price of their offerings to match Amazon; even if someone can, like a Google, it would likely not be a compelling enough reason alone for users to choose them over AWS.  If you want to compete with Amazon, in a space where they are currently the standard-bearer, then you need to build a better mousetrap.

Building a better mousetrap means either a) providing some differentiated services that AWS does not currently offer or b) achieving parity with AWS in terms of services offered but doing it better and with more ongoing innovation.  The former can offer quick success but is difficult to sustain if AWS chooses to offer the same services in the future.  The latter requires much more work and a laser-like focus on developing new services for their Public Cloud: personally, I don’t think a provider can achieve the latter unless they can “employ” a literal army of developers and engineers, like those employed by Google or Microsoft.

Like Microsoft, VMware is attempting to compete with AWS by offering Hybrid Clouds built using vCloud Suite powered Private Clouds and Public Clouds.  The question is will VMware be able to innovate with their yet to be released Public Cloud offering to compete with the services offered by AWS?  If VMware and other contenders like Google and Microsoft want to step up to the plate against AWS in the Public Cloud space, then they need to not merely be content with offering a web portal that allows infrastructure admins to order a farm of virtual machines.  Instead, they need to not chase the Amazon of 2008 but the  Amazon of today and what AWS will become in 2018.



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