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Will Amazon Web Services (AWS) Become the Largest Utility in the World?

By Tami Pierson, Sales Executive December 21, 2016 Tags: Cloud 0 Comments

In Nicholas Carr’s 2008 book, The Big Switch (Rewiring the World from Edison to Google), he chronicled the evolution of power that helped fuel the industrial revolution. Carr wrote that steam engines and waterwheels that generated power for factories, “had to be located close to the point where their power was used.”  Carr noted that factories were clustered around rivers that provided the propulsion necessary to turn the waterwheels, which in turn, powered the factories they served. Factories in the 1800’s were, “as much in the business of manufacturing energy as manufacturing goods.” 

Carr went on to state that large-scale electric utilities were made possible through, “a series of scientific and engineering breakthroughs,” but economics, “ensured their triumph.” “By supplying electricity to many buyers from central generating stations, the utilities achieved economies of scale in power production that no individual factory could match. It became a competitive necessity for manufacturers to hook their plants up to the new electric grid in order to tap into the cheaper source of power.

Fast forward 150 years, and history is repeating itself, this time in IT. Early mainframes communicated with endpoints (‘dumb’ terminals) via directly connected serial cables, requiring close proximity to the compute ‘engine.’  Advances in LAN and WAN network technologies extended the reach between compute engines and endpoints, and the advent of PC’s and mobile devices changed the model, but until recently, most businesses and institutions were still generating their own compute power. The world is changing, and changing fast.

Enabled by Internet and other technologies, cloud compute options started to emerge around 2000.  In his article, Arif Mohamed explains that “one of the first milestones in cloud computing history was the arrival of in 1999, which pioneered the concept of delivering enterprise applications via a simple website. The next development was Amazon Web Services (AWS) in 2002, which provided a suite of cloud-based services including storage, computation and even human intelligence through the Amazon Mechanical Turk.  Then in 2006, Amazon launched its Elastic Compute cloud (EC2) as a commercial web service that allows small companies and individuals to rent computers on which to run their own computer applications.”

Amazon Web Services Re:Invent ConferenceTen years later, at AWS Re:Invent 2016, AWS CEO, Andy Jassy, reported AWS run-rate revenues of ~$13 Billion, with 55% YoY growth.  AWS is larger than the next 14 public cloud providers…combined. AWS offers over 70 services, and announced dozens of new features and services at Re:Invent. Collaborations with partners like VMWare, RackSpace, Palo Alto Networks, and NetApp broaden the appeal of AWS.

AWS hosts workloads for millions of active customers, including over 2,300 government agencies, 7,000 academic institutions, and over 20,000 non-profits. Re:Invent drove home how quickly, and at what scale, AWS is displacing traditional on-premises data centers. As expected, many companies that have emerged in the last 10 years have never bothered with significant on-premises IT infrastructures. Companies like AirBNB, Pinterest, UBER, Slack, Zillow and Twilio come to mind. However, established industry titans like Sony, CapitalOne, McDonald’s, Johnson & Johnson, GE, Dole, NetFlix, Enel, BP, and Shell are closing expensive data centers and aggressively moving workloads to AWS, allowing them to take advantage of the efficiencies and massive economies of scale that AWS offers.

Will AWS become the world’s largest utility, providing on-demand compute power, rather than gas and electricity? According to Investopedia, the largest utilities in the world today include French utility Engie SA (formerly known as GDF Suez) with revenues of approximately $99 Billion, and Enel, based in Rome, Italy, with revenues of approximately $97 Billion. With trillions of dollars of on-premises IT infrastructure still in place, it is conceivable that AWS could become the largest utility on the planet, sooner rather than later.

Making the move to AWS requires thoughtful analysis, careful planning, and excellent execution. ISE has helped move enterprise workloads to AWS, so please call us for more information, and let us know how we can help! 

Tami Pierson, Sales Executive

Tami Pierson, Sales Executive

Tami Pierson is a Sales Executive at Innovative Software Engineering (ISE). Prior to joining ISE in September, 2016, Tami spent 20+ years in the IT infrastructure industry in on-premises and cloud sales, sales management and executive positions. She is excited to help her clients explore how custom software, coupled with cloud technologies, can accelerate innovation and improve agility. In her spare time, Tami enjoys music, yoga, Pilates, biking and spending time with her family and friends.