Much ado about this Forbes piece claiming AWS faces a crisis from competitive inroads made by others, especially Microsoft. Enough impact to trigger an immediate protest from Amazon that the claim is “unfair.” The author’s premise is that Microsoft is finally in a position to compete with AWS and this should scare Amazon because Microsoft has deeper pockets.
Fair enough, as far as that goes. But AWS has significant first-mover advantages to leverage. They are still the share leader. And they get what cycle the business is in – it’s about growth, not profit maximization. When growth eventually flattens, Amazon understands survival goes to he who has the market share. It’s a classic business cycle playing out. There used to be hundreds of car companies in the United States – that whittled down to a handful.
But the real threat from Microsoft, if you’re AWS, may be that you’re a fixed blade while Microsoft is a Swiss army knife. AWS brings a big IaaS blade to the contest. Microsoft also has an IaaS blade, albeit a smaller one at this point. But Microsoft also offers its infrastructure resellers much more – unified communication and SaaS. And SaaS in the form of the mother-of-all SaaS apps: Office365. En garde, AWS!
This is a significant factor because our own Parallels SMB Cloud Insights® research shows that in the United States, for example, the market for IaaS among SMBs, while still steadily growing, is leveling off to a predicted 11% CAGR through 2017. Unified communications, on the other hand, is looking at a potential 32% CAGR.
So to claim AWS faces a competitive “crisis” (Amazon points out that usage last quarter increased 90%) may be engaging in hyperbole. To say AWS is now in a street brawl with an opponent who brought more weapons to the fight is not.
And in a world where data sovereignty is a looming issue, both Microsoft and AWS may jointly face a bigger risk than they do from each other. Microsoft’s Swiss army knife may give them more options there, though.