By Jillian Mirandi, Analyst and Michael Barba, Research Analyst
AWS will build on public IaaS market momentum in CY14 and meet enterprise needs with its swiftly growing portfolio and targeted go-to-market strategy
AWS is successfully executing on its vision towards becoming an enterprise-ready public IaaS provider through the continual introduction of new products up the technological stack, from pure infrastructure and storage to value-added databases, cloud-based VDI (Amazon Workspaces) and application development. Along with the expansion of direct and indirect sales, support and services teams to support enterprise adoption, AWS grew cloud-based revenues 96% from CY12 to an estimated $3.2 billion in CY13 to expand upon its public IaaS market leadership position. Furthermore, AWS’ quarterly estimated revenues eclipsed $1 billion for the first time in 4Q13, up nearly 145% year-to-year. For CY14, AWS will continue to expand its breadth of big data, management and security offerings to cross-sell core EC2 and S3 customer bases.
In CY14, AWS will continue to prioritize infrastructure investments around enhancing the simplicity, scalability and performance of its database portfolio (i.e., Relational Database Service (RDS), DynamoDB, ElastiCache and Redshift) to capture emerging business intelligence and big data opportunities through cross-selling core EC2 and S3 customers. New database-oriented instance types such as I2 and Dense Compute nodes (for I2 and Redshift customers respectively) will improve AWS support for customers running applications on high-performance databases, helping to expand the viability of AWS services in the enterprise. These instance types follow the launches of PostgreSQL on RDS and real-time big data analytics service Kinesis at AWS re:Invent in November, the latter of which will help AWS meet compute, storage and database service customers demand for real-time data analytics (as opposed to batch-oriented processing used by Hadoop).
While AWS’ utilization of economies of scale to continually lower IaaS prices is well known, the vendor also utilizes its scale to offer IAM, platform, provisioning and management services (such as the API call tracking service CloudTrail launched in November) for free, aside from the associated storage and compute resources consumed. While AWS’ portfolio expansion threatens to cannibalize and alienate partnering ISVs offering third-party services, enterprise customers’ demand for sophisticated analytics, management and security tools will leave plenty of room for technological partners in the Amazon Partner Network (APN) to generate business and add value to AWS’ portfolio.
AWS is leveraging its IaaS leadership position to build partnerships with consulting firms to expand its own penetration in the enterprise
AWS will continue to expand beyond its traditionally self-service sales model and develop its enterprise account and support teams to directly support enterprise customers, with APN professional services partners being utilized to deliver enterprise-grade consulting and SI services. AWS’ certification of C&SI partners with APN Competencies will allow professional services vendors to differentiate in strategic solution areas and provide a lead-in for deploying more complex workloads on AWS-based infrastructure. In particular, TBR anticipates AWS will introduce additional enterprise applications competencies in CY14 following the introduction of APN Competencies for Microsoft Exchange, Oracle and SAP at AWS re:Invent, encouraging end-to-end cloud adoption among enterprises through key APN partners such as Cognizant, Smartronix and Wipro.
AWS’ gradual rollout of mainland China cloud services through CY14 will be challenged by local competitive threats — specifically Alibaba
AWS announced plans to launch a limited preview of its fourth APAC and first mainland China data center region in Beijing early CY14, signing MOUs with the governments of Beijing and the Ningxia Hui regions to serve customers in Beijing and western China. Under the limited preview, access will be by invitation only, and provide AWS the opportunity to test adoption in mainland China before rolling out. While local mainland China ISPs such as ChinaNetCenter and SINNET will provide Internet connectivity and help AWS overcome cultural barriers to adoption, TBR believes local IaaS competitors (specifically Alibaba) will serve as a significant roadblock to AWS and other American vendors enter the China IaaS market, including IBM and Microsoft, due to customer familiarity with local vendors. TBR research indicates 37% of IaaS adopters in China (both public cloud and private cloud) adopted Alibaba as a primary vendor in 2013.
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