Amazon Web Services SWOT & Competitor Analysis
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Amazon Web Services SWOT & Competitor Analysis
- 1. Date: 10/30/13 Prepared by: Bessie Chu
- 2. Agenda • Introduction of Cloud Computing • Amazon Web Services Business Model • AWS SWOT Analysis • Competitor Landscape • Competitor Analysis using SWOT Analysis – Rackspace – Google Compute Engine – Microsoft Azure • Summary
- 3. What is Cloud Computing? Cloud computing distributes computing over a network as a practice. Applications run on a large number of computers at a time remotely versus just your machine.
- 4. Business Model and Figures AWS offers cloud computing services, what most people would understand as website hosting. Selling point: You only pay as much as you need the services and Amazon does a lot of the heavy lifting so you can work on your core business. $3 billion out of $61 billion in revenue Current capacity is five ,mes combined capacity of next 14 rivals
- 5. Strengths 1. First market entry in 2006 2. Infrastructure of Dozens of Services 3. Large Entrenched Client Base 4. Capacity 5X Combined that of 14 Compe,tors 5. Higher Investment than Business Rivals
- 6. Weaknesses 1. Public Cloud Business Only 2. Outages 3. Complexity for Customers 4. Price and Service Breadth 5. Profitability QuesFons
- 7. Opportunities 1. Growing market for big business-‐ cloud computing a $300 billion dollar a year business 2. File storage costs less in the cloud with lowering prices so businesses want to move to the cloud 3. Growing suite of products and services that that complement AWS 4. Possibility of spinning off into own business 5. Continued investments and expansions
- 8. Threats 1.Hardware Pricing Price Wars on Services Enables Competing Services 2. Competitors Niche Players Google/ Microsoft/IBM 3. Private Cloud NSA Anxiety and Privacy Customization 4. Database Trends Trends Toward NoSQL/ Nonrelational Databases
- 10. Cloud Infrastructure Investment Landscape Source: Gartner Research hJp://readwrite.com/2013/08/21/gartner-‐aws-‐now-‐5-‐Fmes-‐the-‐size-‐of-‐other-‐cloud-‐vendors-‐combined
- 11. Most Similar to Amazon Web Services Product Mix and Target Clients Rackspace Market Cap: 7.36 Billion 1.3 Billion in Revenue Estimated 900+ Employees Amazon Market Cap: $164.04 Billion AWS 3 Billion in Revenue Estimated 2000+ AWS Employees
- 12. Rackspace’s Current Position Strengths 1. Hybrid Cloud and Private Cloud Businesses 2. Non-‐Proprietary Cloud Open Stack 3. CustomizaFon and Customer Service Weaknesses 1. It has to make money AWS/Amazon doesn’t 2. It’s not Amazon at Enterprise level 3. Outages, Security, and Infrastructure Amazon should diversify from Public Cloud, continue to strengthen infrastructure, and support periphery vendors that help businesses.
- 13. Rackspace Prospects Trend to Private Cloud Appeal of OpenCloud Huge Market ($300 billion dollar industry) Only business is Cloud Computing, chance to be agile Opportunities Amazon Price Wars Amazon’s Unrelenting Advance and Investments Too Much Trying to Copy AWS Google and Microsoft could make move Threats AWS should pay attention to trends and continue to pummel with resources
- 14. Looming Dark Horses *Both do not yet act nor are perceived as full service cloud vendors in the way and at the scale AWS or Rackspace does in the industry
- 15. Google Compute Engine AWS Must Solidify Market Position as Full Service Cloud Service and Deploy Knowledge from Previous Analytics and Success Stories. Strengths: 1. Google Network 2. Instance Flexibility 3. Incremental Billing Weaknesses: 1. Google Perceived as Tone-‐deaf to Enterprise Needs 2. Features and Customer Service Ethos OpportuniFes 1. Google’s ExperFse in Other Areas 2. Space for DifferenFaFon Threats 1. Long Way to Catch up 2. Dismissed as Too LiJle Too Late • Just announced this year. • Positioning itself as a full-‐service Public Cloud Competitor Google Market Cap: $339.17 Billion Cloud Revenue $200 Million in Q2 Amazon Stock Price: $332.54 AWS 3 Billion in Revenue
- 16. Windows Azure Strengths: 1. IntegraFon with Back Office IT ApplicaFons 2. Legacy Provider with .NET and Other Language Support Weakness: 1. Amazon Had Three Year Head Start 2. Brand Weakness-‐ Not Seen as an InnovaFve Player Opportuni,es: 1. One Step Expansion from Enterprise Space 2. Appear to be also Stepping into Hybrid Cloud Business Threats: 1. Perceived as a Lock-‐In Trap 2. Opacity to Engineers Who Don’t use Microsoc Heavy Languages 3. Can it Respond to Price War? MicrosoX Market Cap: $296.94 Billion $1 billion in Cloud Revenue, including Azure Amazon Market Cap: $164.04 Billion AWS 3 Billion in Revenue AWS Should Partner with Services or Expand Infrastructure to Integrate Better with Microsoft Enterprise Systems
- 17. Amazon Must Not Grow Complacent Pursue Market Trends Relentlessly Price War Competitors to Knees Improve Coverage and Security Support Complementary Vendors
- 18. Summary • First large entrant into cloud compuFng business • Advantages lie in scale, infrastructure, and the vast resources of Amazon • Disadvantages include changing industry trends and new large players, but Amazon appears to be paying aJenFon • CompeFtors are a threat because of parFcular aJributes, such as ease of integraFon, associated with each brand – Rackspace – Google Compute Engine – Microsoc Azure • Biggest threat is complacency
- 19. Questions?
Notas del editor
- Amazon Web Services Overview Presentation.This presentation is designed to give an overview of Amazon Web Services’ current position in the cloud computing market. AWS offers cloud computing platforms and associated services run by Amazon.com.
- This presentation covers a brief introduction of what is cloud computing, AWS’ business model, a SWOT analysis of AWS, the competitive landscape, a SWOT analyzing each of the three main competitors, and how AWS should respond.
- Cloud computing distributes computing over a network as a practice. Applications run on a large number of computers at a time remotely versus a single computer. Think of when you use Spotify, Dropbox, or other popular streaming and storage services utilize cloud computing. These services use remote servers and computers across a network. Youplay songs on Spotify through the cloud versus playing songs on a files in your local hard drive via iTunes. Cloud computing has gained rapid adoption recent years because the cost of storage and computing has dropped dramatically in accordance with Moore’s Law.Selling point: You only access Cloud based on the capacity you need it, so you don’t needlessly buy more servers or don’t have enough services. This lets businesses work on their core product, than building its own data infrastructure. Netflix, for example, has AWS run its web services to focus on creating and acquiring content. There is one area where Moore’s law may not apply in cloud computing. It isn’t a matter of just more machines and widgets. It’s also services, often needing highly skilled and highly paid professionals.
- Amazon provides various cloud computing services to private companies and government contracts. They do what many people would understand as website hosting. Services include storing data, feeding information to websites, managingsecure payments, and other functions that would be very difficult to build individually or to manage across several different vendors. AWS offers Public Cloud (generally understood as shared resources across different clients) versus Private Cloud (dedicated data centers to a single client) service. Figures:Estimated $3 billion of revenue out of Amazon’s $61 billion of annual revenue (Business Insider) Current capacity is five times combined of its 14 rivals (Gartner)
- Early entry market in 2006 Amazon recognized that cloud computing would be a growing area of technology. Amazon already had built up massive infrastructure and expertise from running its own e-commerce business. A search of articles from 2006 reveal that the move was initially met with skepticism. Infrastructure of dozens of services (AWS, 2013)Commands large and diverse client base Includes: Zynga, Netflix, TMZ, Dropbox, Reddit, Airbnb, Bristol Meyers Squib, Loinsgate, CDC, Adobe, Spotify, Capgemini to name just a fewCIA $600 million contract alone, a surprising win over Microsoft. (Green, 2013) Computing capacity of five times its next 14 rivals (Edwards, 2013)Higher Investments ($12 billion versus $1.4 billion against principle rivals) since 2005 (Edwards, 2013)
- Weaknesses:Public Cloud Business Only Movement toward Private Cloud and Hybrid Cloud business models as an industry trend.Outages Complexity for CustomersPrice and Service Breadth Profitability QuestionsNo one is sure if AWS is profitable. However, it doesn’t really matter because Amazon able to continually invest in the service.
- Opportunities:Growing market for big business- cloud computing a 300 billion dollar a year business (Barr, 2013)File storage costs less in the cloud with lowering prices so businesses want to move to the cloud Growing suite of products that that complement it Entire companies such as Heroku and CloudCheckr (sic) operate helping AWS customers to use the service.Analysts speculate it could spin off into its own business (Mangalindan, 2013)Continued investments and expansionsContinues to open new data centers and recently entered the Japanese market.
- Threats:Continuous downward pricing on hardware services that make it easier for other players to create similar offers“AWS but in a non-metered, non-rental-based package, can bring horizontal scalability and other cloud benefits to private clouds in a relatively painless manner, then we could see many companies decide that they’d rather take advantage of Moore’s Law and buy their own transistors instead of renting them from Amazon and others” (Darrow, 2013) Challengers from niche players and possibly Google and MicrosoftMicrosoft and Rackspace are listed in the "visionaries" category, while telco-oriented providers Verizon Terremark and Savvis are in the "challengers" quadrant, along with Dimension Data. Joyent, Tier 3, Virtustream, Fujitsu, SoftLayer (now owned by IBM), GoGrid, HP and IBM are considered "niche players" by Gartner (Edwards, 2013)Market trends to private cloudShift toward NoSQLnonrelational databases
- This competitor analysis is structured as a mini-SWOT of each of AWS’s primary competitors in relation to AWS and action AWS should take to remain ahead.
- AWS has five times other vendors computing capacity.Since 2005, Google has spent $20.9 billion on its infrastructure. Microsoft spent ust shy of $18 billion. Amazon? Roughly $12 billion.While more than Rackspace's $1.4 billion cumulative capital expenditures, Amazon's spending is a far cry from what both Google and Microsoft have spent (Asay, 2013).
- Cloud Computing Services and very similar business as Amazon Web Services. Rackspace did cloud computing prior to it being a buzzword, started out initially as a pure webhosting company in 1996 and evolved with the times. It went public in 2008. Differentiator in Customer Service, Customization, and Hybrid Cloud services.
- Strengths: 1.Hybrid Cloud and Private Cloud BusinessesDoes what Amazon does not as a Public Cloud business.2.Non-Proprietary Cloud Open Stack Seen as more flexible and less threat of lock-in.3.Customization and Customer ServiceKnown in industry for their customer service strength and customization, a key differentiation from AWS. Weaknesses: It has to make money.Amazon has huge revenues ($64 billion in 2012) and still loses money, but Shareholders stick with it so it doesn’t matter. Rackspace doesn’t have that luxury (Foremski, 2013).2. It’s not Amazon at Enterprise level.3. Outages, Security, and Infrastructure Reliability A similar issue as AWS and other Cloud services. High profile outages have damaged Rackspace as well as AWS’s image and perception of reliability.
- Opportunities: 1. Trend toward the Private Cloud Following a market trend AWS currently does not support.2. Appeal of Open CloudDifferentiator from AWS going along with a market trend.3. $300 billion market opportunityCloud computing demand continues to grow for the taking.4. Only business is Cloud ComputingChance to be agile. Large enterprises such as Amazon, typically can’t move as quickly. Threats: Amazon price warsAWS has lowered its price 37 times since it started with no sign of stopping (Foremski, 2013).Amazon’s unrelenting advance and investments Seen as just trying to copy AWS featuresGoogle and Microsoft remain dark horses How AWS Should Respond: Amazon should diversify from Public Cloud, continue to strengthen infrastructure, and support periphery vendors that help businesses. It also should pay attention to trends and continue to pummel competitors with its vast resources.
- These two companies haven’t entered and are not perceived as the same category of in terms of Cloud Computing as a line of business in the way AWS and Rackspace is in the industry. The number of services and clients haven’t reached a comparableiin that sense. However, moves by both companies indicate that might begin to change quickly. Information on cloud services provided by these two players is not as detailed or transparent as those on Rackspace, but there are some factorsto consider.
- Just announced this year. Looking to be a Public Cloud Competitor. *Unable to get accurate numbers/estimates on number of employees working on Google Compute Engine or cloud projects at Google.*Q2 Cloud revenue most accurate estimate I could find on recent revenue figures on Google’s cloud businessStrengths:Google NetworkSynergies and vast knowledge of the Google Empire.Instance Flexibility Claimed technological advantage to carry capacity better and be more reliable than AWS (Dignan, 2013).Incremental Billing by the minuteConstantly cited by businesses as an advantage over AWS. Weaknesses:1. Google Perceived as Tone-Deaf to Enterprise Needs (Dignan, 2013)2. Lack of Features and Customer Service EthosGoogle is seen as weak in the Enterprise market on both these fronts. It has consistently been seen as having slow growth in its Enterprise ventures. Opportunities:Google’s Expertise in Other Areas Possible synergies with Google’s existing consumer services, such as advertising and analytics.Can Find Way to DifferentiateOpportunity to throw services to create something different from other competitors. Threats:Long way to catch upLate in the enterprise game compared to all other players.Dismissed as too little too lateGeneral negative perception and cynicism of the venture in the industry. How AWS Should Respond: AWS must solidify market position as full service public cloud providerand deploy knowledge from previous analytics and success stories. AWS has a reliable reputation and proven record of results for servicing the business needs of large enterprise clients and the government, Google does not.
- Claimed to have $1 billion in business. Industry experts skeptical. Mostly PaaS business. Toss-up between developers on positives and negatives of the platform.Strengths:Integration with Office IT ApplicationsAppeals to less complex businesses.Legacy Provider with .NET and Other Language SupportLowers cost and increases ease of adoption. Weakness:1. Amazon Had Three Year Head StartBrand WeaknessMicrosoft not perceived as an innovative player. Opportunities:One Step Expansion from Enterprise Space Already running IT infrastructures of many businesses in areas other than the Cloud.Appear to be also Stepping into Hybrid Cloud BusinessFollowing a market trend. Threats:1. Perceived as a Lock-In Trap2. Opacity to Engineers Who Don’t use Microsoft Heavy Languages (Knighton & Richardson, 2011)Limits itself to more traditional and possibly more unwieldy clients.3. Can it respond to continuing could price wars?High costs of adoption is a key concern. How AWS Should Respond: AWS should partner with services or expand infrastructure to integrate better with Microsoft Enterprise Systems. The two key advantages and threats against AWS are Microsoft’s vendor relationships and claims of integration with existing IT structures of businesses. AWS needs to build around those threats and use its resources to turn those into disadvantages for Microsoft and exploit Microsoft image of being a lock-in threat.
- The largest current threat to AWS is itself. All of its closest competitors and potential competitors all suffer issues arriving late to market. Amazon must continue to pursue market trends relentlessly, wage price wars, improve coverage and security, and support complementary vendors. Its biggest danger is growing complacent.
- AWS key strength lies in its early market entry, investment, and development of services. As the earliest large-scale player in cloud computing, AWS commands a large and arguably locked in client base of diverse businesses. AWS continues to win more business and various companies operate to help businesses adopt AWS. It continues to invest itself and expand its offerings. Its weaknesses are similar to other players in the space. The most glaring weakness is that AWS operates with a Public Cloud business structure, in that all its clients use the same server farms and services without distinct or customizable separations compared to other operating structures. It also used a relational database structure, which many companies now do not use. However, it has begun making moves to accommodate nonrelational databases. Competitive threats exist from Rackspace, Google, and Microsoft. The strengths of companies lie in terms of following market trends, ease of integrations, and other benefits associated with the brand names. Amazon has a huge advantage due to its earlier entry in the market and must continue to innovate to maintain and outpace its competitors.