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Amazon Web Services CEO Andy Jassy at the re:Invent conference in Las Vegas today. (GeekWire Photo / Dan Richman)
Amazon Web Services CEO Andy Jassy at the re:Invent conference in Las Vegas today. (GeekWire Photo / Dan Richman)

LAS VEGAS — After his two-hour keynote at re:Invent 2016 this morning, Amazon Web Services CEO Andy Jassy fielded questions from the 150 journalists who came to the conference from as far away as China, India, Israel and South Africa. His remarks, made during a 45-minute Q&A, are lightly edited.

Q: Could AWS be a $50-billion or a $100-billion business?

AWS CEO Andy Jassy ponders a point during a Q&A with 150 journalists during re:Invent 2016 in Las Vegas. (GeekWire Photo / Dan Richman)
AWS CEO Andy Jassy ponders a point during a Q&A with 150 journalists during re:Invent 2016 in Las Vegas. (GeekWire Photo / Dan Richman)

Jassy: If you believe as we do that in the fullness of time, relatively few companies will have their own data centers, and those will be very small, then that means all that computing is moving to the cloud. We’re very optimistic we’ll remain the significant leader, but there will be several players in multiple geographies that will be successful. We’ve said we think AWS has the potential to be the largest business in Amazon. Our consumer business is $100-billion-plus business and still growing at a good clip, so it’ll take several years for that to happen, but we’re optimistic that could happen.

Q: Is AWS’s lead in the cloud unassailable at this point?

Jassy: Gartner estimates that our business is several times the size of the next largest 14 cloud businesses combined. That said, there’s trillions of dollars in our market, and there won’t be one company that captures it all. There will be several successful players – not 30, a smaller handful. But we’re optimistic we’ll continue to be a strong leader.

Q: There’s always talk of AWS spinning off from Amazon. To what extent do AWS and Amazon still complement each other?

Jassy: AWS is a separable business with a different customer base than our consumer business and with a different leadership team. Amazon’s consumer and retail businesses are big customers of AWS, which has been unbelievably helpful to us, because we have very high quality, very capable, highly demanding internal development teams that are not shy about giving us feedback constantly. They’re always pushing the envelope.

Amazon the retailer is an important customer, effectively external of AWS, but they’re no more important than other big, external customers. Nowhere can you see that easier than with Netflix, which is all-in on AWS. Yet they compete very aggressively with Amazon the retailer in the video space. The reason Netflix chose to use AWS is because they knew they’d be treated as every bit as important a customer as Amazon the retailer is. And that’s been the case.

People ask us a lot about the notion of spinning AWS off. We have no plans to do so. I will never say never, but there’s no compelling reason. Amazon has been so generous and gracious in aggressively funding AWS that there’s no reason to do it.

Q: You’ve made a huge investment in data centers. How did you talk Jeff Bezos into making such a huge investment?

Jassy: Our six-page vision document laid out the opportunity, but there was no P&L and Jeff never asked me about the financials. We asked for 57 resources to build the business. Jeff never blinked. He believed from the very start that this could be a big business, and he has been supportive all along the way.

We look at businesses even if they have nothing to do with our existing businesses. We’ll ask, “If we were successful, could we imagine being really big? How well served is (the space) today? Do we have a differentiated approach? Do we have competency, or can we develop it quickly?” If we like the answers to all those questions, we ask if we can put a single team on it with a number of senior leaders. New businesses often lose out for resources and time because the existing ones are such a sure bet.

In the case of AWS, we were able to put a senior leadership team on it and then hire out a team. And when we have success, we tend to double and triple down on it. In AWS, almost from the very get-go, we’ve had a lot of traction, so it’s made it easy for Jeff and the rest of the leadership team to support us.

Q: My head is spinning. Why did you have to make so many announcements today?

Jassy: It wasn’t feeling like we needed to make them. It’s like a kid opening gifts on Christmas. The people who come to re:Invent are really excited about what the cloud is letting them do. It’s almost like a movement. It’s incredible how passionate people are about having the tools to control their own destiny. A lot of what gives customers the feeling they can do whatever they need to get done is the breadth of functionality AWS provides them. The range of services makes a big difference to customers when they’re choosing an infrastructure provider.

We announced a lot of things today. We have other things we’ll announce tomorrow. We announced a lot in the last two weeks. We have some other things we’ll announce in December and in the first half of the new year. We have dozens of separable, autonomous teams that have two or three years worth of things they’re going to deliver over the next couple of years. And that’s just what we know about today. Every day we get feedback from customers who tell us what they’d like us to build.

Q: Are you seeing any differences in who’s moving into the cloud now?

Jassy: There’s been a transition over the past two to three years: every vertical business segment is starting to use the cloud. Utilities, health care, financial services have completely flipped in their view of the cloud. I was taken aback that several thousand people from the financial-services industry are here this week. That is a very different posture and type of adoption curve that has happened over the past few years.

We have a lot of experience working with regulators now. Every time we show a regulator how things work in the cloud, their response is something like, “Oh, that makes sense. That’s more secure than what you do on-premises.”

Q: Where will the price wars end?

Jassy: We’ve been pretty consistent in our 10.5 years in how we think about pricing. It’s really easy to lower prices. It’s a lot harder to afford those price cuts. We work relentlessly to take our cost structure down, so we can pass that back to customers in the form of lower prices. We have lowered our prices I think on 55 occasions in the last eight years, largely in the absence of any competitive pressure to do so. It’s just part of our normal operating cycle. We expect we’ll continue to lower prices.

Price is an important factor and the conversation starter, but the things that make the biggest difference in picking a cloud provider are speed and agility, which have to do with a platform’s capability. AWS has more capability by a large margin than anyone else. Security matters for every company. And there’s experience. There’s no compression algorithm for that.

Q: How do you see the new U.S. president affecting your business, especially in terms of encryption?

Jassy: No differently than I did a month or a year ago. Virtually every company in the world will move their workloads to the cloud. The economies are just so compelling. That means they’ll need the right security, the right services, the right data privacy, the right cost to let them have the same access to infrastructure as all their competitors, in their own countries and elsewhere. We believe passionately that the customer’s data is theirs. They get to choose where it’s placed. It doesn’t move unless they move it. We don’t look at it. They can encrypt it. Once people understand that, they get over that hump. We’re at the early stages of enterprise adoption outside the U.S.

Q: Are you worried about antitrust threats that have been made about Amazon?

Jassy: We don’t think it’s going to be an issue. Our approach is the same regardless of who’s president.

Q: How do you launch new services so fast?

Jassy: We over-index who we hire, for builders. We want people who finds ways to reinvent customer experiences. They also have to know that success is not overnight; it takes a lot of iterations. We organize into as autonomous, separable teams as possible, with product managers on the same team as engineers and operations folks, to eliminate finger-pointing that happens sometimes.

This gives them a high degree of ownership, and they spend a lot of time with customers and completely own the roadmaps. They can make changes if they hear feedback from their customers. We use the same AWS building-blocks as the rest of Amazon. And the senior people don’t look for a reason to say “no” as we get bigger – they’re looking for ways to say “yes.” We don’t say yes to every idea; we rigorously assess each one. But we say yes a lot more often than others.

And we’re not afraid to fail. If you’re innovating enough, you will have failures, and that’s OK, as long as the inputs into that issue were executed well. People go on to work on other interesting things.

In this culture, everyone in the company spends some free cycles thinking about how to improve the customer experience because they know if they come up with a good idea, there’ll be a good chance they can try it.

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