Amazon Web Services is the undisputed leader in cloud computing, but Microsoft, Google and Alibaba are growing faster than you as a percentage of additional revenue from one year to the next. Are you worried ?
According to Gartner, Amazon Web Services is still several times larger than our top three competitors in online IT infrastructures. People are sometimes mistaken when they look at growth rates because even if we grow less quickly in proportion to our size,
our growth in absolute value is more important
Last year, our revenues were up 41% compared to 2017 for 31 billion recurring annual revenues. In dollars, it is almost double the growth of our first competitor, yet growing more than 70%. What matters most to us is what customers want.
But we offer more features than anyone else on this market. We have more partners because, given our market share, they all choose to work with us before joining the other platforms.
Do you think AWS has the potential to become bigger than Amazon's e-commerce business?
We have been thinking for a long time at Amazon that AWS has the potential to be Amazon's most sensational activity. I do not know if AWS will become so because our business in distribution is very significant. But it's possible when you think that in the next ten or twenty years, only a small minority of companies will have their own data centers.
AWS 'global addressable market, from IT infrastructure to software to data center services, would be worth billions of billions of dollars. Amazon Web Services is worth $ 31 billion in recurring annual revenue but we are only at the beginning (Amazon has generated $ 232 billion in revenue in 2018, Ed).
When you were named CEO of AWS in 2016, Amazon was willing to publicly list its cloud business. You confirm ?
We have no spin-off plan for AWS. It was not true in 2016, it's still wrong today. Typically, I think companies choose to separate into an affiliate when they need to differentiate their financial results for whatever reason or when the parent company can no longer finance the growth of the other activity. In the case of AWS, neither of these two reasons is relevant.
How has Amazon Web Services become so profitable?
AWS was born in the early 2000s when Amazon was working to make its e-commerce technology available to third-party merchants. And because Amazon is a low-margin business, our IT teams have had to imagine a flexible architecture that scales to the level of demands. In particular, they designed the server architecture around bricks of technologies independent of each other, which could be redeveloped without modifying all the others. One day, I was at Jeff Bezos with other Amazon executives and we realized that each of these features, which were later called "microservices", could be commercialized. In 2006, we launched the service.
That immediately worked?
Developers hated old billing models that made them pay for features they used very little. On the other hand, one of our first customers told us very quickly that he could concentrate his resources to consume several terabytes of power which he needed. Then Netflix became a customer. There the companies thought that if AWS had the capacity for Netflix then AWS had the capacity for them. Then, the CIA worked with us. People had the same reasoning, thinking that if the intelligence world trusted AWS then they could give us their data.
To catch up, your competitors are developing more and more microservices tailored to different industries, an offer for the world of energy, another for the actors of the distribution. Will AWS follow them in this direction?
All these clients need computing power, storage, database, machine-learning, etc. The heart of AWS is used by our customers regardless of their field of activity. On the other hand, large companies expect us to understand their trades. We hired specialists in these areas to help these customers make the most of our platform capabilities. But if these companies identify a need specific to an industry, it is possible to imagine over time that we launch a specific offer, as we did for example with the public administrations.
Does Amazon's threat to the world of distribution deprive you of customers in this sector?
We have very large customers in the distribution. The majority of Amazon's competitors in the distribution uses AWS. Some say it, others prefer to remain discreet.
Amazon has long championed the 100% cloud model. Analysts today talk about the promise of the hybrid cloud. What do you think ?
We are still convinced that the majority of servers will sooner or later be in the cloud. Some data processing will stay with companies in their data center. But our customers want to be able to set up these servers with the same interface as those at AWS. That's why we are launching our hybrid cloud system, Outspot, this year.