Amazon Web Services (AWS) demonstrated yet again today that it’s a powerhouse of a public cloud for companies’ applications to run on. But Amazon itself is also a heavy-duty user of the cloud, as executives pointed out on today’s conference call with investors. As the company’s cloud gets bigger and better, Amazon.com stands to gain.
Think of AWS as a turbocharger for Amazon.com to use against e-commerce competitors, including, but not limited to, Walmart, Flipkart, eBay, and even newcomers like Jet.com.
In hindsight, Amazon’s introduction of AWS — starting with the Simple Storage Service (S3) on March 13, 2006 — looks like a stroke of genius.
“It gives any developer access to the same highly scalable, reliable, fast, inexpensive data storage infrastructure that Amazon uses to run its own global network of web sites,” Amazon said at the time. The emphasis, in other words, was on allowing regular programmers to take advantage of the infrastructure that Amazon.com used.
Fast forward nine years, and everyone can see that AWS is now a nearly $6 billion business in terms of annual revenue. The cloud has accumulated more than 1 million customers.
With all of that business, AWS can buy computing, storage, and infrastructure gear at a scale that few other technology companies can. And that savings permits frequent price cuts, rapid feature rollouts, and occasional geographical expansion. All those great bits of news keep existing customers happy and attract new ones.
Amazon.com can take advantage of the same efficiencies that AWS’ customers are enjoying. AWS’ closest competitors in the public cloud business — Google, Microsoft, and maybe IBM — don’t compete with Amazon.com in e-commerce. Amazon does have Alibaba to worry about in the long-term, but Alibaba’s Aliyun cloud is just getting situated in the U.S.
Here’s one thing to keep an eye on: robotics. Amazon currently uses robots in its fulfillment centers for retail purposes. It wouldn’t be far-fetched for Amazon to experiment with using robots for various tasks in its AWS data centers. That, too, could help Amazon keep an edge.
Amazon can take heart from the fact that it was an early mover in the cloud. AWS has had nine years to mature. It would be difficult for an e-commerce company to start building a cloud now with an eye to catching up. Don’t expect Amazon to rest on its laurels in that regard, though. The company continues to invest billions into AWS each year. So long as Amazon continues to do that, its e-commerce business should reap the benefits.