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Here are all the ways Amazon Web Services quietly expanded its $51 billion cloud empire beyond infrastructure under outgoing CEO Andy Jassy (AMZN)

Published by Business Insider on Wed, 31 Mar 2021


<p><img src="https://static5.businessinsider.com/image/60634d9567187800184ad504-2400/reinvent20_1201_keynote-andy-21.jpg" border="0" alt="Amazon Web Services CEO Andy Jassy" data-mce-source="Amazon" data-mce-caption="Amazon Web Services CEO Andy Jassy"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Amazon Web Services, the retail giant's cloud business, is known for the strength and profitability of its core infrastructure platformessentially letting customers move their servers and data to super-efficient data centers run by Amazon itself, under a model called Infrastructure as a Service (IaaS) in the IT industry.</p><p>Since pioneering the IaaS market nearly 15 years ago, Amazon Web Services has maintained its leadership position in cloud infrastructure, considered far ahead of rivals like Microsoft and Google. The cloud unit is currently on track to book over $51 billion in revenue over the next 12 months, and still drives most of Amazon's profit.</p><p>Though it's not a cloud software superpowerleaving that to companies like Microsoft or Salesforcethe reign of outgoing AWS CEO Andy Jassy saw the unit expand its infrastructure focus, establishing itself as a leader in emerging fields like edge computing, artificial intelligence, and big data analytics.</p><p>That strategy of slow but steady expansion to the AWS sphere of influence would be a <a href="https://www.businessinsider.com/adam-selipsky-new-amazon-web-services-ceo-has-one-job-2021-3">wise one for incoming CEO Adam Selipsky to continue to pursue</a>, even after Jassy steps up to replace Jeff Bezos as CEO of the entire Amazon domain.&nbsp;</p><p>Following the Jassy strategy is especially important as the real money to be made is in everything from security and software to services and hybrid cloud, analysts told Insider. Total spending on cloud infrastructure was $130 billion in 2020 according to Synergy Research Group, but spending on IT overall reached $3.9 trillion based on Gartner's estimates.</p><p>At the time of last year's re:Invent, Amazon's annual cloud conference, Dan Newman, an analyst and CEO at Futurm Research, said Jassy indicated the company was "boldly moving beyond IaaS."&nbsp;</p><p>"The total available market to AWS isn't far from all of IT as the company sort of sees itself deploying everything to be able to be brought on-premise, Kubernetes anywhere. It's really building out a stack to say, 'Look, we're going to address it from all angles," he told Insider.</p><p>Here are the key ways Amazon's cloud unit has expanded beyond infrastructure under Jassy, positioning itself to keep its top spot among competitors Microsoft Azure, Google Cloud, and legacy giants like Oracle or IBM.</p><h2>The rise of 5G could make AWS an edge computing superpower</h2><p><a href="https://www.businessinsider.com/edge-computing-perfect-complement-to-cloud-computing-2021-3">Edge computing</a>the industry term for putting data processing power closer to customers' devices or locations for better performanceis a major growth opportunity for cloud providers, especially as <a href="https://www.businessinsider.com/why-5g-is-a-huge-enterprise-opportunity-for-cloud-giants-2021-3">5G networks become closer to being available for enterprise use</a>. With competitors also moving in on the space, Sid Nag, a vice president at Gartner, said Amazon should "start thinking about how they grow their business beyond cloud and expanding to the edge."</p><p>Anticipating the opportunity, Amazon <a href="https://www.businessinsider.com/amazon-web-services-partners-with-network-operators-2019-12">partnered</a> with Verizon and other major network operators in 2019 to launch AWS Wavelength, its 5G edge computing service, which enables developers to build applications that work over 5G networks. AWS Greengrass, released in 2017, lets developers build applications for the Internet of Things. Analysts have also suggested that <a href="https://www.businessinsider.com/amazon-web-services-acquisitions-startups-edge-computing-2021-3">AWS could continue investing in edge computing by buying startups in the space</a>.</p><p>As cloud computing becomes more distributed, <a href="https://markets.businessinsider.com/news/stocks/cloud-security-posture-management-market-worth-9-0-billion-by-2026-exclusive-report-by-marketsandmarkets-1030083289">cloud security will become an area of growth and increasing priority</a>, with analysts predicting the market could reach $9 billion by 2026. Maribel Lopez, founder and principal analyst at Lopez Research, said companies will need data integrity, quality management, and security tools as data moves in and out of AWS data centers.</p><p>AWS is generally well-regarded by experts from a security standpoint, and has released its own features and products to help secure instances, or virtual servers, and encrypt data. "They offer very secure confidential computing and data privacy," Newman said.</p><p>For example, Nitro Enclaves lets customers put highly sensitive data like personally identifiable information into special Amazon EC2 instances, isolated from the rest of the network. AWS Security Hub, which includes an audit manager to track AWS usage for risk and compliance, gives customers an eagle's eye view of their security across AWS accounts.</p><p>But with the <a href="https://www.businessinsider.com/solarwinds-hack-us-government-agencies-cisa-fireeye-microsoft-2020-12">SolarWinds supply chain hack</a> and <a href="https://www.businessinsider.com/microsoft-exchange-hack-hafnium-china-customers-vulnerable-2021-3">Microsoft Exchange hack</a> still top of mind for many customers, AWS will need to keep innovating: "They're going to want to control the entire end-to-end infrastructure," Larry Carvalho, a research director focused on cloud at IDC, told Insider.</p><h2><strong>AWS is betting big on AI to drive new products</strong></h2><p><strong><img src="https://static5.businessinsider.com/image/606356d8c9d73b00186e931d-2400/reinvent20_1201_keynote-andy-06.jpg" border="0" alt="Amazon Web Services CEO Andy Jassy" data-mce-source="Amazon" data-mce-caption="Amazon Web Services CEO Andy Jassy"></strong></p><p>Security can be automated in part by artificial intelligence (AI) and machine learning (ML)another growing area of cloud technology. AWS has a number of AI and ML tools built for the cloud like SageMaker, which lets developers build and deploy machine learning models. Products like Rekognition, the company's <a href="https://www.businessinsider.com/amazon-rekognition-suspend-police-use-of-controversial-facial-recognition-tech-2020-6">controversial facial recognition service that has been used by law enforcement</a>, allows developers to analyze images in applications.</p><p>Other AWS tools utilize AI capabilities: Amazon QuickSight is a machine learning-powered business intelligence service, <a href="https://www.businessinsider.com/amazon-launches-industrial-ai-tools-for-monitoring-productivity-safety-2020-12">AWS Monitron is a industrial machine behavior monitoring tool built with ML released last December</a>, and AWS Panorama is a machine learning product that offers computer vision on video streams.</p><p>Monitron and Panorama, both tools for the manufacturing industry, further point to Amazon's growing toolkit for vertical, or industry-specific cloud products. Amazon HealthLake, launched in December, is a product for the healthcare industry to manage and analyze its immense amount of data. Nitro Enclaves, the isolated EC2 instances, are also <a href="https://www.businessinsider.com/amazon-microsoft-google-public-cloud-government-2021-2">useful for government customers</a> and highly regulated industries like finance and healthcare, which process sensitive data.</p><p>Lopez predicts vertical cloud will become critical for AWS this year. "Those are the kinds of things I think will be important for 2021: trying to figure out what they can spill out in their vertical portfolio, because their horizontal portfolio is pretty much done," she told Insider.</p><h2><strong>Providing analytics could keep more companies using AWS</strong></h2><p><strong><img src="https://static5.businessinsider.com/image/60636ab56183e1001981954d-2283/reinvent20_1201_keynote-andy-32-crop.jpg" border="0" alt="Amazon Web Services CEO Andy Jassy" data-mce-source="Amazon" data-mce-caption="Amazon Web Services CEO Andy Jassy"></strong></p><p>In addition to storing vast amounts of data, AWS provides tools for analyzing it at scaleand more reasons for companies to stick with its cloud.&nbsp;</p><p>AWS Redshift is a ML-powered database that lets developers run queries on data stored in AWS and is similar to HealthLake, the healthcare-specific solution. Tools like AWS Glue and Glue Elastic Views allow developers to prepare and move data around so it can be analyzed, visualized, and processed in real-time.</p><p>AWS is also now shifting to support a hybrid cloud environment, the industry term for the combination of cloud platforms with on-premise servers. At last year's re:Invent, <a href="https://www.businessinsider.com/aws-reinvent-outposts-ceo-andy-jassy-hybrid-cloud-2020-12">Jassy acknowledged this approach was a change for AWS</a>, as the company had once <a href="https://www.businessinsider.com/amazon-eases-restrictions-words-microsoft-google-reinvent-2019-11">banned partners</a> from using the term "hybrid cloud" at events.</p><p>AWS Outposts lets customers run AWS cloud services on their own data centers and on-premises servers, and new versions of Amazon ECS and EKS allow for deploying containers&nbsp;a popular way to package software and ensure it works from a developer's laptop to the cloudon private data centers.</p><p>With hybrid-targeted products like those, Newman said AWS could "continue to go after more and more workloads that have been somewhat considered too risky to move to the cloud."</p><p>There has long been talk of AWS entering the Software as a Service or SaaS market <a href="https://www.businessinsider.com/amazon-web-services-acquisitions-startups-edge-computing-2021-3">in a big way</a>, though executives haven't publicly said they're going after it. Software is a "glaring opportunity" for AWS said Newman, and Nag, of Gartner, said the company needs "a more robust SaaS strategy, which they currently don't have." While the likes of Salesforce and Zoom rely on AWS cloud hosting to function, Amazon itself doesn't offer meaningful rivals to those services.</p><p>But analysts also say AWS already has some SaaS solutions in its roster: Chime, its video conferencing and chat platform, Connect, its cloud-based customer contact center service, and data visualization tools like QuickSight.</p><h2><strong>Its 'biggest competition and threat is itself'</strong></h2><p>With so many features and offerings, AWS is positioning itself to be at the forefront of the future of cloud computing. Even with AWS's market-leading position, it has invested in "capabilities and services across the board," Nag said.</p><p>But such an approach also comes with risksNewman said Amazon cloud unit's "biggest competition and threat is itself."</p><p>"Just making sure it can create enough distinction and disparity between its offerings that it continues to help customers understand the upgrades and the new options, continues to meet capacity, invest in availability zones, upgrade its security, make sure it keeps its data protected," he said.</p><p>And its growth has not escaped antitrust review. Regulators are on the lookout for <a href="https://www.businessinsider.com/amazon-aws-cloud-business-ftc-antitrust-scrutiny-report-2019-12">anticompetitive practices at work at Amazon, within both its retail and cloud businesses</a>, that could limit some of the company's growth strategies.</p><p>Still, <a href="https://www.businessinsider.com/adam-selipsky-new-amazon-web-services-ceo-has-one-job-2021-3">Amazon's numbers and existing portfolio are on solid footing</a>, which means Selipsky is likely to continue expanding Amazon's cloud empire.&nbsp;</p><p>"The whole market's growing, demand for cloud is growing, software. AWS really has so many ways to facilitate that growth with its diverse offering," Newman said. "And Amazon has been very bullish and very aggressive in going at all of it."</p><p><a href="https://www.businessinsider.com/how-amazon-web-services-expanded-cloud-empire-beyond-infrastructure-2021-3#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/what-its-like-to-do-your-own-taxes-for-the-very-first-time-2018-2">July 15 is Tax Dayhere's what it's like to do your own taxes for the very first time</a></p>
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