Monday, December 14, 2009

Where is Amazon heading?

There is something that I've always found confusing about Amazon's cloud strategy.

The development of EC2 & S3 makes good sense given the suitability of these activities for large scale volume operations (an activity that Amazon, as a book-seller, specialises in).

The growth of an ecosystem around these core services and the provision of these services through APIs are ideal. The solving of some of the transitional educational barriers to cloud (such as persistency through EBS) seems spot on and ... well the list goes.

However, I've never quite understood why Amazon chooses to just cannibalise its own ecosystem (the creation of a hadoop service when cloudera existed, the creation of autoscaling when many alternatives existed) rather than buying-out some of those groups. I understand why you'd acquire those capabilities but I'd have mixed in acquisition because it sends strong signalling for others to join the party. There's a negative feedback loop here which could be easily avoided.
[By 2017, despite grumbling of "Amazon's eating our business model" ... they continue to be able play the game.  The negative feedback loop doesn't seem to be as big as I had anticipated]

Given that, I can't be sure of where Amazon is going to head - more copying or a shift to acquisition and a bit of both?

Other than the eventual need to move into a platform space. the moves towards a spot market could suggest that Amazon might attempt to set itself up as the computing exchange for basic infrastructure resources. To do this, it would also need to define itself as the industry standard (not just the defacto) probably through an IETF certification route and hence encourage other providers to adopt this standard. When this might happen (if at all) is tricky because it depends so much on how competitors play the game.
[I never did understand their plan, I still don't.  Most seemed hell bent on oblivion which itself was odd.]

Fortunately for Amazon, it already has several alternative open source implementations to support any standardisation claim and these open source technologies (such as Ubuntu Enterprise Cloud) provide a quick means for providers to get started.
[At the time of writing Ubuntu was starting to take over the cloud space]

There is huge future value in the exchange, brokerage and trading businesses for computing resources. It's what I was intending to go after with Zimki, all those years back but that was in the platform space.

I'm not going to make any predictions for now, I'll leave that until early January. However, if I was a betting man then I wouldn't be surprised if, over a variable amount of time, Amazon :-
[e.g. next 3 to 15 years, not immediately. I must remember to put dates with predictions, as fairly useless otherwise]
  • Goes for IETF standardisation of EC2 & S3
    [Hasn't happened]
  • Allows reserved instances to be traded on its spot market hence creating a basic form of commodity exchange
    [this happened]
  • Enters the platform layer of the computing stack with provision of a development platform
    [this happened with Lambda]
  • Allows other providers (who adopt the EC2 / S3 standard) to sell instances on the exchange
    [Hasn't happened]
  • Exits the infrastructure provision business by selling on the EC2 / S3 services (at a phenomenal premium) whilst keeping the exchange and any established brokerage business i.e. keep the meta data (which is useful for mining an ecosystem but allow others to provide hence overcoming monopoly issues by creating a market)
    [Hasn't happened but I'm still expecting the monopoly issues to raise its head]
--- 8th April 2017
[Added some additional commentary]

25 comments:

Unknown said...

Hi,

Yet another interesting blog post. I believe you are correct on everything but the last point.

History shows that Amazon has almost done all of the above for the rest of the markets they are in. However they still have not decided to exit the selling of physical objects market so I seen no reason why they would exit the compute resource object market.

Exciting times ahead, nothing changes :)

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