Specialist
Former executive at Amazon Web Services Inc (AWS)
Agenda
- AWS (Amazon Web Services) (NASDAQ: AMZN) and its solutions, focusing on moving up the stack and providing analytics, AI and machine learning offerings in the cloud
- Evolving competitive dynamics for AWS, highlighting Microsoft Azure (NASDAQ: MSFT) and Google Cloud Platform (NASDAQ: GOOGL), plus smaller category players such as IBM (NYSE: IBM) and Oracle (NYSE: ORCL)
- Risks related to AWS, highlighting management, culture and employee morale and retention
Questions
1.
How would you describe AWS [Amazon Web Services]? People are likely very familiar with the company but less familiar with what the business consists of. How has it evolved? IaaS [infrastructure-as-a-service] and AWS have changed a lot since you joined in 2017.
2.
It seems that Amazon is more of a modular offering where people can pick and choose what they want, but, as you indicated, people won’t necessarily want to do this as the company tries to move up the stack and cater more towards C-level executives – they want the different offerings in a more specific fashion. Is Amazon focused on doing that and creating predetermined packages to make the process more understandable and attractive for the C suite? How might the company maintain the developer customisation mindset while pursuing enterprise-level relationships with C-level executives?
3.
You suggested that 10% of AWS’s revenue is IaaS-driven, which seems fairly low, especially relative to how people have thought about AWS and its offering historically. Where does the other revenue come from? You highlighted partner revenue, which has become an increasing focus for AWS and its partners. How should we assess revenue mix or contributions and potential revenue growth?
4.
You referenced moving up the stack when talking about 10% of AWS’s revenues being from traditional infrastructure, with so much else seemingly proprietary or differentiated. How important or how much of a focus are machine learning and AI for the company’s next growth wave? What is it doing in these areas?
5.
What percentage of AWS’s revenues would you say comes from analytics, machine learning and AI? Where might that head over the next three years?
6.
Everyone knows the major IaaS players and their respective market shares and positioning – AWS, Microsoft Azure and GCP [Google Cloud Platform] seem to be solidified in the number one, two and three spots respectively, but they’re not necessarily close to each other. Oracle, IBM and Alibaba – depending on the geography – trail behind in a pack. Do you expect any changes to the competitive landscape over the next 1-5 years and what could drive those changes? In a recent Interview [see Oracle – Cloud Solutions, Competitive Positioning & Execution Risks – 21 July 2021], the expert posited the possibility of Oracle divesting its cloud infrastructure business if it can’t gain more traction. Do you expect any consolidation in the category, particularly on the lower end?
7.
Do you expect any significant market share shifts over the next 1-5 years? AWS was growing in the high 20%s pre-pandemic and it delivered 37% growth most recently. I believe Microsoft had 51% Azure growth in Q4 FY21 and GCP was 54%. AWS is much bigger, but despite accelerated growth, the law of large numbers hurts the company, whereas Azure and GCP are still growing above 50%. Is this simply a rising tide lifting all boats? Could Microsoft continue to gain share given its historical enterprise relationships and orientation?
8.
Competitors other than the ones we’ve highlighted may account for 20-30% of the market. To what extent might these major players continue to win share from the top players?
9.
Some people perceive challenges around AWS and Amazon’s broader management and culture. This got a lot of attention when Jeff Bezos stepped down as Amazon CEO in July 2021 and Andy Jassy – who led AWS for almost two decades and is arguably most responsible for its success – was elevated to the role. AWS’s new CEO, Adam Selipsky, previously led Tableau and was at Amazon in several contexts prior to that. To what extent does AWS’s management influence success? What are your thoughts on the culture and employees staying engaged and happy at AWS and Amazon? Many AWS leaders and managers are going to other companies, such as Splunk or leading Oracle’s cloud efforts. How is AWS positioned and performing with management and culture?
10.
What is your 1-3-year outlook for AWS? What is the biggest risk to the business? Is it around culture, management, retention and morale or is there something else?
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