Amazon takes aim at private clouds

Credit: Source: Christina Welsh (Rin), via Flickr

Amazon Web Services used its Global Summit Series event in San Francisco this morning to try to steer enterprises away from private clouds, attacking traditional enterprise vendor strategies along the way.

“When you carefully look at the benefits of why people are moving to the cloud, you realize that private cloud has none of them,” said Andy Jassy, senior vice president of AWS.

He cited a Forrester report that asked enterprises about the features they’re building into their private clouds. Of those surveyed, 24 percent had implemented self-service provisioning, 14 percent had implemented cost chargeback and 27 percent had built resource automation, Jassy said.

So if you can’t do self-service or some of the other key capabilities of cloud services, why build a private cloud? “I think it’s because the model AWS is pursuing and the direction the cloud is moving to is very disruptive to the old guard technology companies. They have built high margin businesses on a set of products that aren’t as compelling if the world moves in this direction,” Jassy said.

He’s not the first to suggest that the cloud creates some problems for traditional enterprise vendors. Others have noted that even the traditional vendors that have built public clouds face a conflict since selling cloud services is often less lucrative than selling hardware or software to enterprises that are building their own data centers.

“It’s important if you’re the enterprise to cut through the noise and evaluate the value you can get,” he said.

There’s another reason that Jassy didn’t mention that businesses may be avoiding AWS in favor of private clouds. “CIOs feel intimidated and offended that Amazon crept in on them through this shadow IT we talk about,” said Eucalyptus CEO Marten Mickos. “The CIOs feel that their mighty empire is threatened by Amazon. They will go to VMware and some to OpenStack.”

Obviously, not all enterprises feel that way. Those that don’t may use Eucalyptus for a private cloud so that they can easily also use AWS.

Jassy offered a number of examples of enterprises using AWS, many in a hybrid fashion where they continue to run some functions internally. “We know there are a lot of enterprises that have data centers and technology assets that they aren’t ready to retire yet,” he said.

For instance, Nasdaq runs its trading apps on-premise but uses AWS to do analytics on that data.

Similarly, Samsung runs its Smarthub interactive TV service on AWS but does payment processing on premise.

Some enterprises are starting to migrate internal apps to AWS though, Jassy said. News International, for instance, has moved a third of its servers to AWS and Unilever has migrated 500 of its 1,000 websites to AWS.

Finally, there are the Netflix’s of the world who decided to move everything to AWS. Right now about 90 percent of Netflix runs on AWS and it expects to shift the rest by the end of this year, Jassy said.

So what about all those companies that people say are moving entirely off AWS? There are some. Some people at the recent OpenStack Summit, who are backing a competitive technology to AWS, were playing up the exodus.

“I don’t think the trend is accelerating,” Mickos said. “There will always be churn.” He said it makes sense for the sheer number of companies leaving AWS to be growing because AWS itself is growing. With more customers using AWS, more will also leave it. But that’s not a sign of any kind of trend away from AWS, he said.

Read more of Nancy Gohring's "To the Cloud" blog and follow the latest IT news at ITworld. Follow Nancy on Twitter at @ngohring. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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