AWS: We're cashing in on cloud price war

Vendor's UK boss insists loyal customers are reinvesting their savings with Amazon

Amazon Web Services (AWS) has said it is not losing out by slashing its prices amid an industry-wide cloud price war and insisted that better-off customers are reinvesting their savings with the firm.

Since 2013, AWS has been embroiled in a war of words – and prices – with cloud rivals such as Microsoft, VMware and Google. AWS' UK managing director Iain Gavin claimed there was an "unintentional aspect" to getting in on price-cutting action and insisted that his firm had been cutting its prices long before rivals did so.

"We've done 46 price cuts in eight years across various services," he said. "It's a basic part of our model – we have been doing price cuts before others even got into the market. Any Amazon business is about selection, availability, great value and customer service. We will continue – when we can get economies of scale – to pass those savings on to our customers because they will bring us more workloads.

"We did a price cut earlier on in the year and I was with a customer the day we did it – he turned to me and said ‘thanks for saving us £60,000 a month!'. I asked him what he was going to do with it and he said ‘I'm going to spend it with you guys but it will take me a couple of months to bring it on to you. I've got a backload of stuff but if you can make that easier for us, we can invest in more people to do the work that drives more volume'.

"Great! That illustrates the model: we bring price cuts, we get more volume. That is our business model and we know how to do that really, really well."

Last month at its Reinvent summit, AWS claimed it was planning on doubling its partner investment next year and unveiled a flurry of channel-friendly initiatives designed to boost sales. Gavin added that in the UK market, more and more business is coming from outside the south-east.

"A lot of business in the UK is squashed in the bottom-right-hand corner so you get a natural pull down there, but we've seen customers in the north-west [grow] – we've got Shop Direct and Money Supermarket there," he said. "And [we're growing] in Scotland too. We're seeing much more regionalisation coming as more and more people come onto the platform. It's pretty cool."

He added that in 2015, getting sales staff among partners clued up on AWS is a key aim.

"We expect the sales side to be as trained up as the technical side," he said. "You generally find as soon as technology comes along, the technicians get into it first before the commercial folks, but we want to get that balance right for customers.

"They need to understand how the cloud works – they are used to on-prem as one model, then they went to outsourcing and now there is a cloud model."

Gavin said he could not disclose what percentage of AWS' business goes through the channel versus direct, but said he wants sales through the latter to boom next year.

"We couldn't scale the business without partners; they are an incredibly important aspect of what we do," he said. "The business is growing very rapidly so I expect more and more is to go into the channel. I'm very comfortable with where it is at now but we obviously want the channel to take on more because customers need more help. That natural spin-up growth we're in is going to be good for everybody."