2. Agenda
• Introduction
of
Cloud
Computing
• Amazon
Web
Services
Business
Model
• AWS
SWOT
Analysis
• Competitor
Landscape
• Competitor
Analysis
using
SWOT
Analysis
– Rackspace
– Google
Compute
Engine
– Microsoft
Azure
• Summary
3. What is Cloud Computing?
Cloud
computing
distributes
computing
over
a
network
as
a
practice.
Applications
run
on
a
large
number
of
computers
at
a
time
remotely
versus
just
your
machine.
4. Business Model and Figures
AWS
offers
cloud
computing
services,
what
most
people
would
understand
as
website
hosting.
Selling
point:
You
only
pay
as
much
as
you
need
the
services
and
Amazon
does
a
lot
of
the
heavy
lifting
so
you
can
work
on
your
core
business.
$3
billion
out
of
$61
billion
in
revenue
Current
capacity
is
five
,mes
combined
capacity
of
next
14
rivals
5. Strengths
1.
First
market
entry
in
2006
2.
Infrastructure
of
Dozens
of
Services
3.
Large
Entrenched
Client
Base
4.
Capacity
5X
Combined
that
of
14
Compe,tors
5.
Higher
Investment
than
Business
Rivals
6. Weaknesses
1.
Public
Cloud
Business
Only
2.
Outages
3.
Complexity
for
Customers
4.
Price
and
Service
Breadth
5.
Profitability
QuesFons
7. Opportunities
1. Growing
market
for
big
business-‐
cloud
computing
a
$300
billion
dollar
a
year
business
2. File
storage
costs
less
in
the
cloud
with
lowering
prices
so
businesses
want
to
move
to
the
cloud
3. Growing
suite
of
products
and
services
that
that
complement
AWS
4. Possibility
of
spinning
off
into
own
business
5. Continued
investments
and
expansions
10. Cloud
Infrastructure
Investment
Landscape
Source:
Gartner
Research
hJp://readwrite.com/2013/08/21/gartner-‐aws-‐now-‐5-‐Fmes-‐the-‐size-‐of-‐other-‐cloud-‐vendors-‐combined
11. Most
Similar
to
Amazon
Web
Services
Product
Mix
and
Target
Clients
Rackspace
Market
Cap:
7.36
Billion
1.3
Billion
in
Revenue
Estimated
900+
Employees
Amazon
Market
Cap:
$164.04
Billion
AWS
3
Billion
in
Revenue
Estimated
2000+
AWS
Employees
12. Rackspace’s
Current
Position
Strengths
1. Hybrid
Cloud
and
Private
Cloud
Businesses
2. Non-‐Proprietary
Cloud
Open
Stack
3. CustomizaFon
and
Customer
Service
Weaknesses
1. It
has
to
make
money
AWS/Amazon
doesn’t
2. It’s
not
Amazon
at
Enterprise
level
3. Outages,
Security,
and
Infrastructure
Amazon
should
diversify
from
Public
Cloud,
continue
to
strengthen
infrastructure,
and
support
periphery
vendors
that
help
businesses.
13. Rackspace
Prospects
Trend
to
Private
Cloud
Appeal
of
OpenCloud
Huge
Market
($300
billion
dollar
industry)
Only
business
is
Cloud
Computing,
chance
to
be
agile
Opportunities
Amazon
Price
Wars
Amazon’s
Unrelenting
Advance
and
Investments
Too
Much
Trying
to
Copy
AWS
Google
and
Microsoft
could
make
move
Threats
AWS
should
pay
attention
to
trends
and
continue
to
pummel
with
resources
14. Looming
Dark
Horses
*Both
do
not
yet
act
nor
are
perceived
as
full
service
cloud
vendors
in
the
way
and
at
the
scale
AWS
or
Rackspace
does
in
the
industry
15. Google
Compute
Engine
AWS
Must
Solidify
Market
Position
as
Full
Service
Cloud
Service
and
Deploy
Knowledge
from
Previous
Analytics
and
Success
Stories.
Strengths:
1.
Google
Network
2.
Instance
Flexibility
3.
Incremental
Billing
Weaknesses:
1.
Google
Perceived
as
Tone-‐deaf
to
Enterprise
Needs
2.
Features
and
Customer
Service
Ethos
OpportuniFes
1.
Google’s
ExperFse
in
Other
Areas
2.
Space
for
DifferenFaFon
Threats
1.
Long
Way
to
Catch
up
2.
Dismissed
as
Too
LiJle
Too
Late
• Just
announced
this
year.
• Positioning
itself
as
a
full-‐service
Public
Cloud
Competitor
Google
Market
Cap:
$339.17
Billion
Cloud
Revenue
$200
Million
in
Q2
Amazon
Stock
Price:
$332.54
AWS
3
Billion
in
Revenue
16. Windows
Azure
Strengths:
1.
IntegraFon
with
Back
Office
IT
ApplicaFons
2.
Legacy
Provider
with
.NET
and
Other
Language
Support
Weakness:
1.
Amazon
Had
Three
Year
Head
Start
2.
Brand
Weakness-‐
Not
Seen
as
an
InnovaFve
Player
Opportuni,es:
1.
One
Step
Expansion
from
Enterprise
Space
2.
Appear
to
be
also
Stepping
into
Hybrid
Cloud
Business
Threats:
1.
Perceived
as
a
Lock-‐In
Trap
2.
Opacity
to
Engineers
Who
Don’t
use
Microsoc
Heavy
Languages
3.
Can
it
Respond
to
Price
War?
MicrosoX
Market
Cap:
$296.94
Billion
$1
billion
in
Cloud
Revenue,
including
Azure
Amazon
Market
Cap:
$164.04
Billion
AWS
3
Billion
in
Revenue
AWS
Should
Partner
with
Services
or
Expand
Infrastructure
to
Integrate
Better
with
Microsoft
Enterprise
Systems
17. Amazon
Must
Not
Grow
Complacent
Pursue
Market
Trends
Relentlessly
Price
War
Competitors
to
Knees
Improve
Coverage
and
Security
Support
Complementary
Vendors
18. Summary
• First
large
entrant
into
cloud
compuFng
business
• Advantages
lie
in
scale,
infrastructure,
and
the
vast
resources
of
Amazon
• Disadvantages
include
changing
industry
trends
and
new
large
players,
but
Amazon
appears
to
be
paying
aJenFon
• CompeFtors
are
a
threat
because
of
parFcular
aJributes,
such
as
ease
of
integraFon,
associated
with
each
brand
– Rackspace
– Google
Compute
Engine
– Microsoc
Azure
• Biggest
threat
is
complacency
Amazon Web Services Overview Presentation.This presentation is designed to give an overview of Amazon Web Services’ current position in the cloud computing market. AWS offers cloud computing platforms and associated services run by Amazon.com.
This presentation covers a brief introduction of what is cloud computing, AWS’ business model, a SWOT analysis of AWS, the competitive landscape, a SWOT analyzing each of the three main competitors, and how AWS should respond.
Cloud computing distributes computing over a network as a practice. Applications run on a large number of computers at a time remotely versus a single computer. Think of when you use Spotify, Dropbox, or other popular streaming and storage services utilize cloud computing. These services use remote servers and computers across a network. Youplay songs on Spotify through the cloud versus playing songs on a files in your local hard drive via iTunes. Cloud computing has gained rapid adoption recent years because the cost of storage and computing has dropped dramatically in accordance with Moore’s Law.Selling point: You only access Cloud based on the capacity you need it, so you don’t needlessly buy more servers or don’t have enough services. This lets businesses work on their core product, than building its own data infrastructure. Netflix, for example, has AWS run its web services to focus on creating and acquiring content. There is one area where Moore’s law may not apply in cloud computing. It isn’t a matter of just more machines and widgets. It’s also services, often needing highly skilled and highly paid professionals.
Amazon provides various cloud computing services to private companies and government contracts. They do what many people would understand as website hosting. Services include storing data, feeding information to websites, managingsecure payments, and other functions that would be very difficult to build individually or to manage across several different vendors. AWS offers Public Cloud (generally understood as shared resources across different clients) versus Private Cloud (dedicated data centers to a single client) service. Figures:Estimated $3 billion of revenue out of Amazon’s $61 billion of annual revenue (Business Insider) Current capacity is five times combined of its 14 rivals (Gartner)
Early entry market in 2006 Amazon recognized that cloud computing would be a growing area of technology. Amazon already had built up massive infrastructure and expertise from running its own e-commerce business. A search of articles from 2006 reveal that the move was initially met with skepticism. Infrastructure of dozens of services (AWS, 2013)Commands large and diverse client base Includes: Zynga, Netflix, TMZ, Dropbox, Reddit, Airbnb, Bristol Meyers Squib, Loinsgate, CDC, Adobe, Spotify, Capgemini to name just a fewCIA $600 million contract alone, a surprising win over Microsoft. (Green, 2013) Computing capacity of five times its next 14 rivals (Edwards, 2013)Higher Investments ($12 billion versus $1.4 billion against principle rivals) since 2005 (Edwards, 2013)
Weaknesses:Public Cloud Business Only Movement toward Private Cloud and Hybrid Cloud business models as an industry trend.Outages Complexity for CustomersPrice and Service Breadth Profitability QuestionsNo one is sure if AWS is profitable. However, it doesn’t really matter because Amazon able to continually invest in the service.
Opportunities:Growing market for big business- cloud computing a 300 billion dollar a year business (Barr, 2013)File storage costs less in the cloud with lowering prices so businesses want to move to the cloud Growing suite of products that that complement it Entire companies such as Heroku and CloudCheckr (sic) operate helping AWS customers to use the service.Analysts speculate it could spin off into its own business (Mangalindan, 2013)Continued investments and expansionsContinues to open new data centers and recently entered the Japanese market.
Threats:Continuous downward pricing on hardware services that make it easier for other players to create similar offers“AWS but in a non-metered, non-rental-based package, can bring horizontal scalability and other cloud benefits to private clouds in a relatively painless manner, then we could see many companies decide that they’d rather take advantage of Moore’s Law and buy their own transistors instead of renting them from Amazon and others” (Darrow, 2013) Challengers from niche players and possibly Google and MicrosoftMicrosoft and Rackspace are listed in the "visionaries" category, while telco-oriented providers Verizon Terremark and Savvis are in the "challengers" quadrant, along with Dimension Data. Joyent, Tier 3, Virtustream, Fujitsu, SoftLayer (now owned by IBM), GoGrid, HP and IBM are considered "niche players" by Gartner (Edwards, 2013)Market trends to private cloudShift toward NoSQLnonrelational databases
This competitor analysis is structured as a mini-SWOT of each of AWS’s primary competitors in relation to AWS and action AWS should take to remain ahead.
AWS has five times other vendors computing capacity.Since 2005, Google has spent $20.9 billion on its infrastructure. Microsoft spent ust shy of $18 billion. Amazon? Roughly $12 billion.While more than Rackspace's $1.4 billion cumulative capital expenditures, Amazon's spending is a far cry from what both Google and Microsoft have spent (Asay, 2013).
Cloud Computing Services and very similar business as Amazon Web Services. Rackspace did cloud computing prior to it being a buzzword, started out initially as a pure webhosting company in 1996 and evolved with the times. It went public in 2008. Differentiator in Customer Service, Customization, and Hybrid Cloud services.
Strengths: 1.Hybrid Cloud and Private Cloud BusinessesDoes what Amazon does not as a Public Cloud business.2.Non-Proprietary Cloud Open Stack Seen as more flexible and less threat of lock-in.3.Customization and Customer ServiceKnown in industry for their customer service strength and customization, a key differentiation from AWS. Weaknesses: It has to make money.Amazon has huge revenues ($64 billion in 2012) and still loses money, but Shareholders stick with it so it doesn’t matter. Rackspace doesn’t have that luxury (Foremski, 2013).2. It’s not Amazon at Enterprise level.3. Outages, Security, and Infrastructure Reliability A similar issue as AWS and other Cloud services. High profile outages have damaged Rackspace as well as AWS’s image and perception of reliability.
Opportunities: 1. Trend toward the Private Cloud Following a market trend AWS currently does not support.2. Appeal of Open CloudDifferentiator from AWS going along with a market trend.3. $300 billion market opportunityCloud computing demand continues to grow for the taking.4. Only business is Cloud ComputingChance to be agile. Large enterprises such as Amazon, typically can’t move as quickly. Threats: Amazon price warsAWS has lowered its price 37 times since it started with no sign of stopping (Foremski, 2013).Amazon’s unrelenting advance and investments Seen as just trying to copy AWS featuresGoogle and Microsoft remain dark horses How AWS Should Respond: Amazon should diversify from Public Cloud, continue to strengthen infrastructure, and support periphery vendors that help businesses. It also should pay attention to trends and continue to pummel competitors with its vast resources.
These two companies haven’t entered and are not perceived as the same category of in terms of Cloud Computing as a line of business in the way AWS and Rackspace is in the industry. The number of services and clients haven’t reached a comparableiin that sense. However, moves by both companies indicate that might begin to change quickly. Information on cloud services provided by these two players is not as detailed or transparent as those on Rackspace, but there are some factorsto consider.
Just announced this year. Looking to be a Public Cloud Competitor. *Unable to get accurate numbers/estimates on number of employees working on Google Compute Engine or cloud projects at Google.*Q2 Cloud revenue most accurate estimate I could find on recent revenue figures on Google’s cloud businessStrengths:Google NetworkSynergies and vast knowledge of the Google Empire.Instance Flexibility Claimed technological advantage to carry capacity better and be more reliable than AWS (Dignan, 2013).Incremental Billing by the minuteConstantly cited by businesses as an advantage over AWS. Weaknesses:1. Google Perceived as Tone-Deaf to Enterprise Needs (Dignan, 2013)2. Lack of Features and Customer Service EthosGoogle is seen as weak in the Enterprise market on both these fronts. It has consistently been seen as having slow growth in its Enterprise ventures. Opportunities:Google’s Expertise in Other Areas Possible synergies with Google’s existing consumer services, such as advertising and analytics.Can Find Way to DifferentiateOpportunity to throw services to create something different from other competitors. Threats:Long way to catch upLate in the enterprise game compared to all other players.Dismissed as too little too lateGeneral negative perception and cynicism of the venture in the industry. How AWS Should Respond: AWS must solidify market position as full service public cloud providerand deploy knowledge from previous analytics and success stories. AWS has a reliable reputation and proven record of results for servicing the business needs of large enterprise clients and the government, Google does not.
Claimed to have $1 billion in business. Industry experts skeptical. Mostly PaaS business. Toss-up between developers on positives and negatives of the platform.Strengths:Integration with Office IT ApplicationsAppeals to less complex businesses.Legacy Provider with .NET and Other Language SupportLowers cost and increases ease of adoption. Weakness:1. Amazon Had Three Year Head StartBrand WeaknessMicrosoft not perceived as an innovative player. Opportunities:One Step Expansion from Enterprise Space Already running IT infrastructures of many businesses in areas other than the Cloud.Appear to be also Stepping into Hybrid Cloud BusinessFollowing a market trend. Threats:1. Perceived as a Lock-In Trap2. Opacity to Engineers Who Don’t use Microsoft Heavy Languages (Knighton & Richardson, 2011)Limits itself to more traditional and possibly more unwieldy clients.3. Can it respond to continuing could price wars?High costs of adoption is a key concern. How AWS Should Respond: AWS should partner with services or expand infrastructure to integrate better with Microsoft Enterprise Systems. The two key advantages and threats against AWS are Microsoft’s vendor relationships and claims of integration with existing IT structures of businesses. AWS needs to build around those threats and use its resources to turn those into disadvantages for Microsoft and exploit Microsoft image of being a lock-in threat.
The largest current threat to AWS is itself. All of its closest competitors and potential competitors all suffer issues arriving late to market. Amazon must continue to pursue market trends relentlessly, wage price wars, improve coverage and security, and support complementary vendors. Its biggest danger is growing complacent.
AWS key strength lies in its early market entry, investment, and development of services. As the earliest large-scale player in cloud computing, AWS commands a large and arguably locked in client base of diverse businesses. AWS continues to win more business and various companies operate to help businesses adopt AWS. It continues to invest itself and expand its offerings. Its weaknesses are similar to other players in the space. The most glaring weakness is that AWS operates with a Public Cloud business structure, in that all its clients use the same server farms and services without distinct or customizable separations compared to other operating structures. It also used a relational database structure, which many companies now do not use. However, it has begun making moves to accommodate nonrelational databases. Competitive threats exist from Rackspace, Google, and Microsoft. The strengths of companies lie in terms of following market trends, ease of integrations, and other benefits associated with the brand names. Amazon has a huge advantage due to its earlier entry in the market and must continue to innovate to maintain and outpace its competitors.