Amazon Cloud Technology, which has been involved in almost every big computing revolution of the 21st century so far, is a legendary story that began as an experiment about 20 years ago when Amazon tried to sell off its surplus servers. People do doubt it. Why are online bookstores trying to sell cloud services?
But now, Amazon Cloud Technology is the world's largest cloud service provider and Amazon's most profitable division, generating more than $22 billion in sales last quarter alone. Amazon cloud technology is estimated to power about one-third of the world's internet. In the rare event that an Amazon Cloud Technology cluster goes down, it's felt by countless platforms, websites, and services, and by hundreds of millions of users.
The following is taken from an exclusive interview with Amazon Cloud Technology CEO Adam Selipsky by the editor-in-chief of technology media The verge.
The profound significance behind cloud transformation
Reporter: Amazon Cloud Technology will usher in 20 years, and now it has become Amazon’s most profitable part. It is leading developments in many fields, including artificial intelligence. You were involved early on. You left your job to become CEO of Tableau. You returned as CEO of Amazon Cloud Technology in 2021. What do you think of Amazon Cloud Technology now?
Adam: When we started, we talked about a lot of IT benefits, like freeing up a lot of the undifferentiated heavy lifting in IT operations. However, we will not talk about these issues now. Because, I think, people have really understood that Amazon cloud technology can really change the way organizations run. I think we've become one of the driving forces in reshaping and transforming the company, not just part of the way IT and the Internet works.
Reporter: “Cloud transformation, innovative IT transformation” is the content of Amazon Cloud Technology’s airport advertisement. My first question is: Do you approve airport advertising? Does this work for you in terms of the term "cloud transformation" that you're using? Is this just to educate people about Amazon cloud technology? Or these code names allow people with decision-making capabilities to say, "Okay, I'm familiar with Amazon Cloud Technology."
Adam: If we do it right, this is actually the reality. Because if you go and talk to our valued customers, they're changing certain parts of what they do. We should elaborate on what this means. But I think it makes sense to them. This is not code. I'll call it shorthand. It was shorthand for the change they saw.
Let me give you a very specific example: I can show you a lot of pharmaceutical companies who used to have scientists, highly paid scientists, take 12 to 20 weeks to get servers, actual physical servers to do their research. They would sit there and wait, being inefficient.
And through the elastic computing model pioneered by Amazon Cloud Technology, you can complete this work in less than 30 minutes. Pharmaceutical companies one after another will tell you that they use Amazon cloud technology to improve and shorten the time to market of their drugs. So, this is a very specific example.
If you have to spend a lot of capital expenditures on a big project, spend a lot of money, you've spent money and you're not going to get it back. Even if a project isn't going well, no one admits it easily. But in a cloud computing model, you just turn things on and off. So what happens? You'll get to experiment quickly. So when I talk about change, it's not a buzzword. It's about, for example, a specific concept of reducing the penalty for failure.
Reporter: Is this your term for reducing failure penalties? Do you think so too? Or is this something the market has developed over time?
Adam: We've been saying this for a long time, different people hear it mean different things. We may be better or worse at amplifying certain messages. But I think it's resonating with people right now, in part because we're still in the early stages of our cloud journey. I don't know which analyst reports to trust, but we probably think that 10% or 15% of IT has now moved to the cloud. People think it must be more than that because we're now an $88 billion business and there are other cloud providers and they're like, "Oh, these are huge businesses. So this must have happened." .” But IT is too huge. With trillions of dollars being spent every year, it’s easy to quickly see that much of the migration hasn’t happened yet.
Reporter: When you mentioned IT, I was particularly curious about this word. I think most people hear IT and their brain goes to the person who provides the laptop, or their mouse is broken, or their printer doesn't work. You're talking about IT in a very different way. "I'm starting a business, and this business is on the Internet. In order to run the business, I need to run some code on the computer, the computer needs to be configured, maintained, the service upgraded, and Amazon should do this so that you can focus on Code that runs on a computer.”
Adam: Exactly. In the past, you had to own your own data center or rent space in someone else's data center. You must have physical servers in the data center. You must have a network connection to this data center. And then you have a bunch of software on those physical servers, whether it's applications like databases, storage software, websites, or genomic analysis, or financial Monte Carlo simulations, whatever it is—you can run all your software applications on the stack. The first major revolution in the cloud was when Amazon Cloud Technology essentially replaced it. So now, you just bring your own applications and then you just run them on the cloud. This is what Amazon Cloud Technology has pioneered.
This concept of not being tied down to everything you have to buy changes the way people think. Client after client told us, "Yeah, we just started spinning things. We broke things down, we experimented. We knew some of them were going to fail." What happened next was people within the company became more innovative, As a result, companies have become more innovative. If a company becomes more innovative, that means its culture is changing. So, when I talk about transformation, yeah, I think that's probably a code word. This is a code word: reduce the penalty for failure, increase the ability to innovate, and actually give everyone more new ideas every month than before. It's a culture change within our clients that they find incredibly powerful.
Considerations behind airport advertising
Reporter: Is Amazon Cloud Technology’s advertising expenditure on the NFL and airport advertising worth it?
Adam: We look at all of our spending very carefully. Overall, Amazon is a very frugal company. Amazon Cloud Technology is no exception. We're now a large enough business with many different types of customers, highly technical developers who were our first customers and in many ways are still the lifeblood of Amazon Cloud Technologies. We also have CEOs of Fortune 50 companies and CIOs of government agencies and everyone in between, so you're reaching different people in different places and in different ways.
Our company's advertising footprint is probably much smaller than that of many other companies. But we do believe that some of the messaging, advertising and awareness-building that some of our media partners publish for some of our customers is useful. For the NFL, we don't just advertise with the NFL, we innovate with the NFL.
We have a whole range of features around next-gen statistics, and the NFL is really innovating to provide customers with incredibly interesting data. We work closely with the NFL on player safety. We have installed more than 300 sensors on football pitches and players. We are considering factors such as weather, the venue itself and equipment. The NFL will use all the analytics we help them build to reduce concussions, reduce knee injuries, and make players safer.
These are the types of stories we want to tell. We're not just saying, "Oh, Amazon exists." We're saying, "This is what Amazon means to the people who are watching this football game. It means you're going to have a better experience." .It means you can understand these athletes. We try to really connect Amazon Cloud Technology to the use cases relevant to this partner as much as possible.
Reporter: I always want to ask this question because during NFL games, my Twitter or other information streams are full of people who already know what Amazon Cloud Technology is, and they are all saying: "Who doesn't know Amazon Cloud Technology yet?" Will we still need Amazon Cloud Technology?”
Adam: If you think back, maybe the cloud has penetrated 10% of IT, so where is the other 90%? Some of them are rising from a very small percentage to a large percentage of existing customers. Some of them are new customers. Of course, some countries are not as far along in cloud adoption as the United States. Even the United States is still in its infancy. Again, I think people see the size of our business and how fast we're growing and they say, "Well, it must be very mature. There can't be more of it in the future." But that's not true, that's Because the entire market size is so huge.
Cloud technology is still in its early stages. A lot of innovation is behind us. I predict that in 10 years we'll look back and say, "Do you remember 2023? Everything was so young then. And it was so early, could you believe X, Y, Z?" I mean, As an independent market, we are far from mature.
The differentiation of Amazon cloud technology
Reporter: You summed up the value of Amazon's cloud technology very well, roughly: "You shouldn't be running so many of your own computers. Give it to us. You can scale it up or down, which reduces your risk. It makes You're more innovative." But it's okay to paste some version of these recommendations into Microsoft Azure or Google Cloud. I want to talk about differentiation. When you think about the competitive environment, where are your disruptive competitors for your cloud business now? Where are the small companies that do things you don’t do in a different way? Do you see this happening? Or are these three giants crushing everything?
Adam: Well, the first thing I want to say is that the big cloud providers are not all created equal. By the way, we face stiff competition. But it’s good for our customers. Frankly, it's good for us too, competition makes us better. But we are not all the same. If you look at our track record, we're more secure than other clouds and we do have fewer types of problems. But we're not proud of it. Security is not something that can be complacent because you never know what will happen tomorrow. But speaking from experience, we are safer because of the approach we take and the effort we put in.
Secondly, and very importantly, we have absolutely best-in-class operational excellence and reliability. Again, while perfection is the only goal, we know we will never truly achieve statistical 100.0% perfection. Whenever we have a service issue, it's painful for us because it's painful for our customers as well. But again, as a rule of thumb, if you look at third-party measurements, our uptime is the highest of all the major cloud providers. We've had some very significant multi-day service outages from other vendors over the past few months that have never happened in the history of Amazon Cloud Technologies and that's because we have a different architecture. So we are not all the same. We have the broadest and deepest capabilities, which is why we're so much larger than other cloud providers.
Beyond these suppliers, where does competition come from? I think you're going to see artificial intelligence everywhere now. You can easily see some startups that are new to life—or not even born yet, so we don’t know about it—solving these problems in different ways.
I personally have said many times that we don't want to act like the incumbent. We always want to act like an insurgent: Incumbents worry about what they have and how to protect it, while insurgents think about the possibilities for customers. How can we possibly make them happy in a way that makes them unhappy today? Let's do it, whatever it takes. Incumbents manage numbers and ratios, while disruptors manage products or customers.
We try to bring as many people as possible to the product and the customer. You can see that with all the innovation and change happening in the AI space, any of these companies could wake up and decide, “Hey, Amazon — or any other big cloud provider — they think they have the database business, or they thought they had a storage business. But instead, I'm an artificial intelligence company doing something completely different. I'm looking at the world in a different way." I choose to be interested in things that may or may not even exist. There's a strong wariness among startups to approach problems in different ways and from angles that we don't see because we have existing businesses.