AWS, a winner within
Amazon as a company, grew at around 9 % YoY in 2022, During COVID period it saw spikes in its growth rate. AWS contributes to only 15% of its revenue but it grew at 22% YoY. It has always been a fast growing business unit. For example, Amazon Retail business grew at a CAGR of 16% between 2015 and 2022, but AWS grew at a CAGR of 39% (from $8Bn to $80Bn).
Some of you may already know that Amazon’s retail businesses (e-commerce) are loss making entities but AWS is a lucrative business. It made an operating profit of $22Bn, while the e-commerce businesses made a loss of $9.7Bn. So it is AWS that fuels Amazon’s growth.
So it is safe to say, Amazon is essentially a cloud provider that offers a logistics intermediation to publicize its brand 🙂
As you are aware, Amazon started off with its e-commerce business, selling books first. Aren’t you eager to know how AWS was born and why is it very profitable?
AWS is also a market leader in cloud computing.
Source: Statista.com. Author: Felix Richter
Discover the incredible journey of AWS and how it emerged as the undisputed leader in cloud computing. From its humble beginnings to its global dominance, AWS propelled to its extraordinary success. Look at their key milestones and strategies.
It started with Client Pain
It all started in the early 2000s when the company aimed to launch an e-commerce service called Merchant.com. The purpose was to assist large merchants, such as Target or Marks & Spencer, in building online shopping sites using Amazon’s e-commerce engine. However, creating an external development platform proved to be more challenging than anticipated. As the company had not adequately planned for such future requirements when it was founded in 1994, they ended up in a chaotic situation where it became extremely difficult to separate the different services and create a centralized development platform that would benefit third parties.
To address this issue, the company ended-up creating well-documented APIs. This not only facilitated smoother development for Merchant.com but also improved the internal developer experience as it set the foundation for a more organized and disciplined approach to internal tool development. This was the event that triggered the birth of AWS.
The APIs and applications that they were building were getting delayed. Despite having additional workforce, the speed of application development didn’t improve significantly. Andy Jassy, who served as the chief of staff to Amazon CEO Jeff Bezos, decided to investigate the issue. What he discovered was a recurring complaint among the teams. For their specific projects, each team was independently creating resources such as building the database, compute, or storage component, without considering scalability or reuse. It was becoming clear where this was heading.
Recognizing the need for common infrastructure services accessible to all internal teams, Amazon embarked on building such a solution. They aimed to eliminate the need for reinventing the wheel with every project, and it was during this process that they began to realize the potential magnitude of what they were creating. They realized they had become quite good at running infrastructure services like compute, storage and database due to the volume of new applications they were launching. That gave a way for a latent competency of offering reliable, scalable, cost-effective data centers to others.
AWS was officially launched in 2006 when Amazon decided to extend these services of infrastructure-as-a-service (IaaS) to external customers.
Initially it started offering S3 (Simple Storage Service) and Amazon EC2 (Elastic Compute Cloud). These offerings provided scalable storage and virtual servers, respectively, setting the stage for AWS’s cloud computing platform. They didn’t have competition for a while.
Growth Phase
Between 2009 and 2012, AWS experienced a surge in popularity as startups and enterprises flocked to embrace cloud computing. The unmatched flexibility, scalability, and cost-effectiveness of AWS services attracted a diverse range of customers. In 2010, AWS received FedRAMP certification, enabling it to serve government agencies.
From 2013 to 2016, AWS continued to expand its service portfolio, introducing game-changing offerings such as Amazon Redshift, Amazon RDS, and Amazon Elastic MapReduce. Simultaneously, AWS rapidly expanded its global infrastructure, establishing data centers in various regions to ensure optimal customer experience.
Market Dominance and Leadership
During the period of 2017 to 2019, AWS solidified its position as the leading cloud provider, capturing a significant market share. Its customer base expanded to encompass large enterprises, government organizations, and startups. AWS introduced pioneering services like Amazon Aurora, AWS Lambda, and Amazon SageMaker.
Continued Innovation
Since 2020, AWS has sustained its focus on innovation, constantly introducing new services to meet the evolving needs of customers. It has ventured into advanced technologies like AI, IoT, and blockchain. AWS’s enterprise adoption has soared, as businesses across diverse industries turn to its cloud services for digital transformation.
Amazon Web Services (AWS) has emerged as the indisputable leader in cloud computing, thanks to its early entry, relentless innovation, comprehensive service portfolio, global presence, and unwavering commitment to customer satisfaction.
Are you a B2B leader who is unsure about how to achieve SUSTAINABLE business growth and do you want to have predictable and consistent growth in your organization?
AWS’s Client-centric Growth Strategies
Here are few client-centric growth strategies that contributed to its continued success
Pay-as-you-go Pricing Model:
AWS revolutionized the cloud computing industry by introducing a pay-as-you-go pricing model. This model allowed customers to pay only for the resources they consumed, eliminating the need for large upfront investments. It provided businesses with cost flexibility and scalability, making cloud computing accessible to organizations of all sizes. To start with this served as a very attractive value proposition for start-ups and SMBs.
Serverless Computing:
AWS Lambda introduced serverless computing, where developers could focus solely on writing code without the need to manage servers or infrastructure. This innovative approach to computing helped streamline development processes, reduce operational overhead, and optimize resource utilization.
Comprehensive Support and Documentation:
AWS is committed to providing extensive support to its customers. It offers a comprehensive range of documentation, tutorials, and training resources, ensuring customers have the knowledge and tools required to succeed in the cloud. Additionally, AWS provides responsive and dedicated support channels, enabling customers to seek assistance and resolve issues promptly.
Thriving Customer Community and Partnerships:
AWS fosters a vibrant customer community and ecosystem by encouraging knowledge-sharing, collaboration, and networking. Through events, forums, and user groups, AWS facilitates peer-to-peer interactions, enabling customers to learn from each other’s experiences and best practices. AWS also builds strong partnerships with technology providers, system integrators, and ISVs, further expanding the support and solutions available to customers.
Extensive Service Portfolio:
AWS continuously expanded its service portfolio by non-stop innovation, offering a wide range of services to cater to various customer requirements. This strategy allowed them to become a one-stop-shop for cloud computing needs, offering solutions for storage, compute, databases, analytics, AI, machine learning, IoT, and more. By providing comprehensive services, AWS attracted a broad customer base across different industries and use cases.
Machine Learning and AI Services:
AWS invested heavily in machine learning and AI services, democratizing access to these technologies. They launched services like Amazon Rekognition (image and video analysis), Amazon Polly (text-to-speech), and Amazon Comprehend (natural language processing), enabling developers to integrate AI capabilities into their applications easily.
IoT Solutions:
AWS developed a suite of services specifically designed for the Internet of Things (IoT). These services, such as AWS IoT Core and AWS Greengrass, provided secure and scalable platforms for connecting and managing IoT devices. AWS’s IoT offerings helped organizations leverage the power of connected devices and data for various applications.
Data Analytics and Big Data Services:
AWS introduced a comprehensive suite of data analytics and big data services, including Amazon Redshift, Amazon Athena, and Amazon EMR. These services enabled businesses to process and analyze vast amounts of data efficiently, gaining valuable insights and driving data-driven decision-making.
Hybrid and Multi-Cloud Capabilities:
AWS acknowledged the importance of hybrid and multi-cloud environments. They developed solutions like AWS Outposts, allowing customers to run AWS services on-premises, and AWS Transit Gateway, simplifying network connectivity between on-premises and AWS environments. These initiatives facilitated seamless integration between existing infrastructure and AWS services, enabling organizations to adopt hybrid and multi-cloud strategies.
All of the above strategies were successful because AWS and in general, Amazon is obsessed with understanding customer needs. That is how they identified what strategies are needed and how they have to be packaged.
AWS goes above and beyond to deeply understand its customers’ pain points, challenges, and requirements. This involves actively listening to customer feedback, engaging in dialogues, and conducting regular surveys and assessments. AWS invests significant resources in gaining insights into its customers’ businesses and aligning its services accordingly.
Thus AWS’s success stands out due to several unique aspects that differentiate it from traditional business practices but all of them originated from a deep understanding of clients and their changing needs – a truly client-centric growth approach .
