Two weeks ago AWS announced its financial results and, for the first time, broke out AWS revenues. AWS, it said, achieved $4.6 billion in 2014, and will reach $6.2 billion in 2015, with a growth rate of 49 percent -- which is accelerating. Perhaps more surprising is that AWS is not a low-margin business -- it achieves around 17 percent operating margins, much higher than the overall Amazon business itself.
Stories by Bernard Golden
In 2014, Gartner introduced a prescriptive organization model for enterprise IT called "Bimodal IT." It posits that IT organizations of the future will have two separate flavors, if you will: Type 1 is traditional IT, focused on stability and efficiency, while Type 2 is an experimental, agile organization focused on time-to-market, rapid application evolution, and, in particular, tight alignment with business units.
One of the most -- perhaps the most -- influential books in Silicon Valley over the past two decades has been "Crossing the Chasm" by Geoffrey Moore. In it he posits the existence of a technology adoption bell curve (Figure 1) -- starting with innovators, who eagerly grasp new technologies to gain competitive advantage, through to laggards who typically wait for technology to be established as a service, thereby requiring no internal technical expertise.
In March, I discussed IDC's 2014 forecast. This unusually dramatic set of predictions based on what IDC refers to as the third platform, a confluence of cloud computing, mobile devices and applications, social media and big data.
Last week I visited VMworld 2014, where a horde of steely-eyed virtualization acolytes swarmed into the din of an expo floor, creating an atmosphere redolent of a religious revival being held in a Vegas casino. Vendor booths filled Moscone Center's South Hall to bursting, ranging from enormous displays presented by longtime technology stalwarts such as HP and IBM down to a multitude of tiny booths displaying products from new market entrants. All came to pay fealty to the industry's dominant virtualization player and claim their place in the VMware firmament. The outpouring of energy (and money) made the show floor something like a natural wonder akin to the Niagara Falls – overwhelming, awe-inspiring and vastly entertaining.
Two weeks ago, Amazon announced its quarterly earnings, reporting a much larger net loss than expected. There was much speculation by pundits about the reasons for the scale of the loss (including me in a CNBC segment). Many commentators placed responsibility for size of the loss on Amazon Web Services -- after AWS responded to an approximately 30 percent price cut by Google, the size of the "other" AWS category, in which Amazon places AWS revenues, fell 3 percent from the previous quarter.
My last couple of columns have addressed cloud adoption patterns by IT organizations. Has Cloud Computing Been A Failed Revolution discussed the seeming ennui regarding cloud computing on the part of IT groups – that they seem less interested in the field, despite the belief on the part of vendors that the cloud represents tomorrow's technology infrastructure. Most recently, The Real Cloud Computing Revolution described three real-world examples of companies using cloud computing to solve problems they couldn't have addressed in the infrastructure models of traditional IT.
My last post noted that the IT industry appears to suffer from cloud computing ennui, as the number of Google searches for the term over the past two years has dropped significantly. I also said that other evidence indicates that many IT users appear to have put cloud computing in the "done and dusted" category despite not really understanding it very well.
Talk to IT personnel, or study what they look up on Google, and you may think they're done with cloud computing. Talk to analysts or more importantly, end users, and you'll hear a different story.
In my recent post on IDC's 2014 predictions about how what it calls the "third platform" will radically disrupt the IT ecosystem, I note that the most intriguing prediction addresses how technology users will leverage the third platform to disrupt existing non-technology industries.
Price cuts from Amazon, Google and Microsoft support predictions that the public cloud computing market is a race to the bottom -- for pricing, that is. Customers will no doubt benefit, but cloud providers who aren't one of those three companies should be prepared for a long, hard war of attrition.
What IDC deems the third platform of computing -- social, mobile, cloud and big data -- is transforming IT much faster than the first (mainframe) or second (client/server) platforms ever did. This has tremendous implications for the IT industry, yes, but also for anyone doing business in today's world.
Last week, Saugatuck Research released an analysis of IBM's new BlueMix offering. In introducing BlueMix, IBM announced its intention to invest $1 billion in application-oriented initiatives, including a commitment to CloudFoundry and making technologies such as the venerable application server WebSphere available as an online offering. The always insightful Lydia Leong from Gartner weighed in; she's obviously impressed by BlueMix.
In the past, infrastructure deployment and application updates both slowed the development lifecycle. Now that cloud computing lets organizations provision resources in minutes, not months, it's time to alter the application lifecycle accordingly. DevOps can help -- but only if it extends beyond 'culture change' to actually achieve continuous deployment.
Most of today's applications, and all of tomorrow's, are built with the cloud in mind. That means yesterday's infrastructure -- and accompanying assumptions about resource allocation, cost and development -- simply won't do.