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A billboard touts Amazon Web Services as the cloud with the “most everything” at Sea-Tac Airport in advance of its annual re:Invent conference in Las Vegas. (GeekWire Photo / Todd Bishop)

Amazon Web Services will be able to tout some of the biggest numbers in the booming cloud industry at its annual re:Invent conference in Las Vegas this week.

  • AWS is now a $36 billion business, using its preferred metric, revenue run rate, extrapolating the latest quarter’s results to generate an annual number. The business has grown nearly 35 percent in the last year, with total profits of $8.8 billion in the last four quarters.
  • Amazon’s cloud business has 47.8 percent of the global market for public cloud Infrastructure as a Service (IaaS), the fundamental building blocks of computing, storage and networking in the cloud. That’s about twice the combined market share of its closest two competitors, Microsoft and Alibaba, according to Gartner research.
  • The trends are also working in the company’s favor in key markets such as databases. Gartner predicts that 75 percent of all databases will be in the cloud within three years, with Amazon Web Services and Microsoft Azure positioned to capture a large portion of the growth against Oracle and other traditional database providers.

On that last point, Oracle founder Larry Ellison is a perennial punching bag in AWS re:Invent keynotes, and it wouldn’t be a surprise to hear AWS CEO Andy Jassy trumpet the fact that the company’s consumer business recently completed its own migration away from Oracle databases.

But big picture, all of these numbers explain why Amazon’s re:Invent conference has become one of the most important tech events of the year. While Amazon is best known for its own e-commerce site, its cloud division is also the go-to cloud provider for some of the world’s top brands in media, healthcare, financial services, travel and other key sectors. More than 50,000 people attended re:Invent last year.

The presentations begin Monday night with a keynote by Peter DeSantis, AWS VP of global infrastructure and customer support, followed by Jassy on Tuesday morning; AWS partner chief Doug Yeum, head of worldwide channels and alliances, on Wednesday; and Amazon CTO Werner Vogels on Thursday.

Amazon Web Services CEO Andy Jassy at re:Invent 2018. (Amazon Photo)

AWS got things rolling Monday morning with announcements of new business wins from Best Western Hotels & Resorts and Sweden’s Klarna bank, as well as the news that Formula One Group is using AWS for complex aerodynamics simulations to design new Formula 1 race cars. The company also announced a series of new machine learning technologies, including this year’s surprise hardware announcement, a musical keyboard.

But the backdrop for this year’s conference also includes a big loss for Amazon, the U.S. Department of Defense’s decision to award its $10 billion cloud computing contract, known as JEDI, to Microsoft over AWS in a surprise upset in October. Amazon is appealing the decision, saying that bidding process was improperly influenced by political pressure from the White House.

Covering the event on the ground in Las Vegas this week, we’ll be listening closely for any direct reference to the JEDI contract from Jassy or other execs.

But even if JEDI isn’t addressed directly, Amazon’s announcements in one area — hybrid computing — could factor into the discussion. Addressing the issue in an interview with GeekWire, Microsoft CEO Satya Nadella said hybrid computing was one reason Microsoft’s bid for the Pentagon contract stood out. Given its legacy in traditional servers, Microsoft has long focused on this approach, letting customers run cloud technologies on their own hardware and data centers in addition to the public cloud.

At re:Invent last year, Amazon announced a new hybrid cloud service called Outposts to let businesses run AWS services in their own data centers with the same hardware that Amazon uses, in partnership with VMware. Industry observers will be watching for new Outposts features and momentum, as AWS seeks to counter Google Anthos and Microsoft’s recently announced Azure Arc.

“AWS has reinvented its position on hybrid cloud – to be charitable about their u-turn on the subject – but still have to show they are really committed and can deliver,” said Charles Fitzgerald, a Seattle-area angel investor and former VMware and Microsoft executive who follows the cloud industry closely.

Other areas to watch: Amazon’s Lambda serverless computing technology; the combination of the Internet of Things and voice technologies; and artificial intelligence, particularly Amazon’s facial recognition technology, Rekognition, which has been at the center of a controversy over privacy and AI, based on its use by law enforcement.

Ultimately, what’s at stake is Amazon’s long-term position as the public cloud leader.

A key question is whether AWS can continue to outpace three rivals in particular. The public cloud market is increasingly becoming a competition among Amazon, Microsoft, Google and Alibaba. A report from Synergy Research Group found that those four providers were responsible for 72 percent of the global cloud market for infrastructure and platform services in the third quarter, up from 57 percent less than three years ago.

“It is particularly noteworthy that as spending on public cloud services continues to grow rapidly, the top four cloud providers are strengthening their grip on the market,” said Synergy chief analyst John Dinsdale in a statement. “Some of the companies outside the top four are actually growing at a reasonable pace, but the reality is that in aggregate they continue to lose ground to the market leaders.

He explained, “Outside of some niche services and geographic regions, this is a game where scale of operations, geographic footprint and global brand are key competitive advantages.”

This week should give us a clearer sense for whether AWS is positioned to continue building on those advantages, and its lead in the public cloud.

Hey, GeekWire readers, what would you ask Andy Jassy? Amazon is inviting GeekWire and other media at the event to each submit one question in writing for the AWS CEO’s press conference at re:Invent this year, in lieu of live questioning (which will no doubt cause some grumbling from the assembled press corps). Regardless, we want your input. Send your suggestion to tips@geekwire.com, and we’ll let you know if we choose yours.

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