Author: Charl Benckendorff Student ID: 216201542
Ask anyone about cloud computing 5 years ago and you probably won’t have received an answer as to what it is and what it does. Today however it’s big business the *aaS (* = Infrastructure, Software, Platform as a Service ) revolution has been one of the biggest technology disrupters in the last decade. The basic concept is large technology companies host online hardware, software and platforms for corporate consumers, small businesses and startups to utilise at a reduced cost compared to privately hosting your own datacenter infrastructure and systems.
According to Gartner the public cloud services market is forecasted to reach $204 billion in 2016. AWS (Amazon Web Services) continuing to dominate worldwide market share at over 31% in the first quarter of 2016. With competition from the likes of Microsoft, IBM and Google, what does set AWS apart?
This year AWS turns 10. In 2006 AWS released its cloud storage and cloud computing offering. AWS was the first company on the market to release such an offering. From its early days it has had almost 50 price slashes. Being the first on the market however doesn’t grantee success but coupled with being the best dressed does.
From its beginnings AWS has been a market leader. Gartner notes: AWS is a thought leader; it is extraordinarily innovative, exceptionally agile, and very responsive to the market. It has the richest array of IaaS features and PaaS-like capabilities. It continues to rapidly expand its service offerings and offer higher-level solutions. Although it is beginning to face more competition from Microsoft and Google, it retains a multiyear competitive advantage.
Gartner: Magic Quadrant for Cloud Infrastructure as a Service 2015
In overlaying the marketing model STP (Segmentation, Targeting and Positioning) clear parallels can be drawn in the analysis of AWS’s current state and the success it’s had.
One selling point of AWS services is that it pitches its products to not only large corporates but also B2C such as Netflix, B2B such as SAP and your everyday low budget entrepreneurial startups who require the flexibility in scaling up services as required. To further strengthen this AWS have positioned themselves to be global leaders by saturating worldwide geographical points of presence above and beyond its competitors. Within the Australian finance sector for example where companies must store data within the country of registration due to regulatory bodies such as APRA. So far AWS has continued on a positive trajectory in market segment domination and doesn’t look to be slowing down with 4 new regions coming soon.
For as little as $15 per month small business\startups can take advantage of AWS virtual servers offering. Compare this to the cost of a small business DELL server at around $2000 up front. Expand this figure out to large IT corporates and add in additional services and you have a pay as you go recipe for success. This year Q1 profits speak for themselves at $2.57 billion this is up 64% from a year ago. With operating costs at $604 million, there is no question AWS is onto a good recipe from a ROI standpoint. Given the YoY growth AWS could expect more price reductions and better cost efficiency. With ongoing growth from investors FY17 profits are look very healthy.
With AWS leading the Cloud Services in size, points of presence, diversity in business uptake as well as innovation in offering a multitude of services it has strategically placed itself as a top tier provider with a fruitful future. Whilst pricing is comparable to the likes of Microsoft offerings it does provide additional services and draws in startups with its AWS Activate program which provides free services and discounts. It has been a proven contender in the innovation space also which has kept AWS ahead of the pack. It is clear AWS has a ‘catch all’ strategy from the basement developer to the large IT Corporates.
A quick take of how AWS SWOT analysis stacks up and it’s obvious from an internal (the S&W) perspective the company’s strengths out strip its weaknesses. One key weakness to focus on is a self-serve model – Think simplicity, intuitive in use and ease of provisioning services for the non-technical customer base. When assessing external (O&T) factors, AWS are positioned well however overcoming competitor market share creep needs focus as market share statistics have revealed, by no means a threat given the gap however to be closely monitored.
First to market in 2006
Large services offering
Large client base
Capacity 5 X Capacity that of 14 competitors
Higher Investment than business rivals
Complexity for customers
Growing market for big businesses
Server\storage costs less in the cloud so business want to move to the cloud
Growing suit of products and services that complement AWS
Continued investments and expansions
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