Amazon’s Cloud Computing

Amazon’s cloud services were created in 2006 as a side project, but as of 2016 made $10B of revenue, holding 30% of the cloud marketspace [1]. The origins of their cloud business goes back to the early 2000s when they wanted to create a service called to help brick and mortar companies like Target adopt online shopping services. However, Amazon realized existing infrastructure to build something that would work for a wide array of users was too complicated and messy. Instead, Amazon created a number of simpler APIs to help make that creation smoother and better.

Simultaneously, though Amazon was hiring more software engineers, the rate at which products were being developed had not increased, because the engineers didn’t focus on creating adaptable and scalable code and therefore had to recreate any new product from bottom up. The company then realized they needed to do something to streamline and allow for scalable development, which was the very core catalyst for creating cloud computing. In fact, cloud made most sense because upon evaluation of what Amazon could do to resolve the issue, the company knew “they had become highly skilled at running reliable, scalable, cost-effective data centers”[1]. CTO of Amazon Werner Vogels said that “developers no longer needed to focus on buying, building and maintaining infrastructure” [2].

By 2006 when Amazon launched its first cloud computing product, there weren’t many competitors so Amazon was able to garner a lot of the market share. Furthermore, as stated by Charles-Axel Dein, Project Analyst at faberNovel, Amazon held a stronghold in cloud computing because cloud computing is “a very important component in the digital content economy. Amazon is a retailer that is increasingly selling digital goods”[2].

It was very smart of Amazon to enter the cloud space, despite how disparate the market seems at first from Amazon’s original book online shopping experience. Amazon was able to identify its core competencies beyond the obvious online sales and focus on its deeper foundations. In other words the question that was answered was: what allowed Amazon to be so good at selling items online to begin with? Based upon that focus on Amazon’s core competency, Amazon solved a problem that fortuitously was not only the company’s own problem (inefficient engineering work), but also happened to be a widespread problem that would become all the more apparent as tech pervaded farther and deeper into our lives. As Montse Medina stated in class, it’s important to have the business and market first and then build the tech for it. In this case, Amazon really did have the problem they were solving for, a market, and therefore business for which they then built out the technical parts.

The main competitors for Amazon today are Google and Microsoft. Will Amazon continue to do well in the cloud computing space? This will probably depend on how technology continues to evolve. Cloud computing will have to adapt and address the growing needs for better speed, customization, simplicity, and special services catered not only to developers but also any consumer who would benefit from using cloud services. As stated in class, there has to be constant innovation and in order to stay top of game, Amazon will need to think about its next steps on how it will transform its cloud services to match the trends of tech and the world. Perhaps there is a future in which a nontechnical person will be “developing” with the cloud to perform a task, technical or not. It is an exciting and rapid time for this space and it will be interesting to see how things play out in the next decade, especially in combination with other emerging tech such as AI and ML.


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3 comments on “Amazon’s Cloud Computing”

  1. Hi,
    I found this piece very interesting and totally believe that companies like Amazon are using their power to move up-market and provide additional services that are potentially higher margin. But even if Amazon can’t end up pulling that off, it will likely remain the dominant cloud computing platform for a long time because it is the only large technology company that is used to competing in very low margin space. Companies like Google will have a tough time redesigning their culture to compete with the ultra cost-conscious Amazon.

  2. Hi spak7! Great post on Amazon’s cloud computing services! I definitely think it’s so fascinating that Amazon originated as a online bookstore, and now as transitioned into an electronic commerce and cloud computing company! Amazon is even competing with Netflix, producing it’s own TV series content (I occasionally watch Bosch, which is an Amazon original). Do you think Amazon will continue to dominate in both markets (e-commerce and cloud computing) or focus more on one over the other? Amazon is diversifying itself into a lot of markets, and I’m just wondering what you think about the success of that business model? Thanks!

  3. It is an interesting post on how Amazon’s cloud computing came about. It started as their desire for infrastructure and operational efficiency, and as a result, gave birth to a multi-billion-dollar public computing business. Additionally, I think you are correct that Amazon Web Service (AWS) will need to think hard about their next move, given that there are many more competitors now, such as Microsoft, Google, Oracle, IBM and Alibaba from overseas. AWS’s recent partnership with VMWare could be a game changer, but I know that Microsoft’s advantage over enterprise customers is very promising. It will be interesting to find out whether AWS’s domination in the public computing space will continue.


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