The closing session at yesterday’s WTIA TechNW conference in Seattle was a conversation with Andy Jassy, the senior vice president in charge of Amazon Web Services, the cloud-computing division of the tech giant.
The interview by Madrona Venture Group’s Matt McIlwain didn’t exactly hold Jassy’s feet to the fire, starting off with McIlwain saying he hoped it would be an on-stage version of their periodic breakfast meetings at the Portage Bay Cafe. However, Jassy did deliver some insights into Amazon Web Services’ strategy and approach.
Here are five quotes that stood out …
Putting AWS in perspective: Every single day right now, we are adding at AWS enough new servers to have handled all of Amazon when it was a $3 billion revenue company around the year 2000.
The rise of ‘private clouds’ behind company firewalls: If you look at it, it’s actually all of the old-guard technology companies that are driving the private cloud. These companies have run at 60 to 80 percent gross margins for the last 20 years. Cloud computing and the model that AWS is pushing is not a 60 to 80 percent gross margin business. It’s a much lower margin business, so it’s very disruptive to those companies. I think that’s why they’re pushing the private cloud: It doesn’t disrupt their business, and it’s still high margin for them.
Price wars: The way we think about our business, and it’s true in every business at Amazon, is we start with the customer and then everything moves backwards from there. We’ve just never met customers in any of our businesses that like to pay higher prices. If you are a high-volume, low-margin provider like we are, and you think about the world in that way, when you’re able to lower your costs — which we’re constantly working on — we’re not looking to pocket those savings, we’re looking to give them back to customers in the form of lower prices.
The need to stay flexible: Ninety percent of our roadmap is made up of items that our customers are telling us that they want. We actually very consciously don’t publish a 12- to 24-month roadmap, which sometimes bothers people because they’d like to know what we have coming, but we do it because we want to reserve the right to adjust our roadmap very quickly if we hear there are things that are more important for customers than we thought a year ago, because the space is so dynamic.
The roots of AWS: We started in part because Amazon, the retailer, growing as fast as it did, had to get really good at running deep infrastructure services in the stack, and at running really reliable, cost-effective data centers, because our retail business is very low margin. So we had this competence, and I can tell you though, 6-and-a-half years later, with hundreds of thousands of customers and every imaginable use case, we are much better at it today. There is really no compression algorithm for experience.