Partners of Amazon Web Services (AWS) have welcomed the intense price war brewing in the infrastructure-as-a-service (IaaS) space.
Microsoft has laid down the gauntlet to AWS by pledging to price match the IaaS market's undisputed silverback on its Azure infrastructure services, which went on general availability in the UK last week.
Google has also recently leapt into the market with its Compute Engine offering.
For its part, AWS has cut prices on its IaaS offering 31 times since it launched in 2006, chief technology officer Werner Vogels told customers at yesterday's AWS summit in London.
Vogels said he hoped that one day soon compute and storage would be regarded in the same way as electricity as AWS continues to slash its prices. It is able to do this by passing on cost savings achieved through increased economies of scale and innovations in both its infrastructure and software, he said.
Switching on a light
"One thing that sets AWS aside from other service or technology providers is our relentless focus on reducing costs," he said.
"When you woke up this morning and switched on the light in your room, you didn't think about how much it will cost. If we can get the cost of compute and storage to that point as well, the amount of innovation driven will be tremendous."
The prospect of a price war can often set alarm bells ringing in the channel but AWS partners present at yesterday's summit welcomed its efforts to simplify and commoditise the infrastructure market.
Pontus Noren, co-founder of Cloudreach, a 90-strong AWS partner which helps UK enterprises migrate to the cloud, said customers will still need expertise from channel partners to help them resolve complexities around applications.
"If IT is supposed to be a utility, the whole definition of utility is that the price should be low and should over time, as you become more efficient, become even lower," he said.
"Just because AWS is doing its best to automate and simplify the platform – and so are Google and other platform providers – we still think there will be a key role for us to play in this. So we support the price reductions and think this is the way the industry should be behaving. We play in the highly intellectual space so are moving away from being the guy plugging in the cable to cutting-edge technology."
Joseph Spear, marketing manager at Smart421, an SI that began working with AWS in December 2010 and has about a dozen AWS enterprise customers, welcomed the price competition Microsoft Azure would provide.
"It comes as no real surprise that product managers responsible for Windows Azure would feel almost duty bound to try to match [AWS]," he said. "In fact, I think the competition is welcome. It all helps to keep the big names focused on delivering value in the channel."
Unravelling the enigma
AWS is notoriously enigmatic about its stature, although one analyst recently estimated the firm will turn over a whopping $3.8bn (£2.5bn) this year, up from $2.1bn in 2012.
It was therefore no surprise that Vogels divulged few hard numbers, although he did say that the number of objects stored on Amazon S3, its core storage product, stood at two trillion as of a week and a half ago, up from one trillion just 10 months earlier. He would only say that AWS has "hundreds of thousands" of customers – vague since many will be very small tech start-ups.
Having launched its first partner programme – the AWS Partner Network (APN) – last year, AWS now has about 4,000 global consultancy, reseller and ISV partners.
Noren at Cloudreach, which is a top-level consulting partner with about 30 to 40 AWS customers, argued that the secrecy surrounding AWS' numbers works because its services speak for themselves.
Amazon worked on the underlying technology for 15 years before AWS launched and Noren argued this gives it a huge advantage over anyone else entering the IaaS market.
"They have spent years being a phenomenally clever software development house and have maybe an eight to 10-year headstart on the majority of the competition," Noren said.
"Google is getting into this now and they are one of the few players who can potentially compete because they have the scale, the reach, and they have good software engineers – but it will take them years to catch up. We should not underestimate the complexity of what Amazon has built."
Some analysts estimate that Amazon could now sell AWS for $19bn if it were a standalone entity and Vogels said even he was caught cold by the vendor's ubiquity and growth – last year it added 195 major features and services, compared with 82 in 2011, 61 in 2010, 48 in 2009, 24 in 2008 and nine in 2007.
"If I go back seven years, I could not have imaged [we would be] where we are now and the kind of impact AWS and cloud computing in general would have had on how IT is changing," he said.
"When we launched EC2 in August 2006, the mission was to help developers and businesses build sophisticated, scalable applications. Over time, enterprises have picked up on the advantages of cloud computing and have taken this in a very different direction."
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