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Amazon Web Services (AWS), the cloud platform offered by Amazon.com Inc. (AMZN), has become a massive component to amazons business portfolio. In the first quarter of 2020, AWS brought in a record $10 billion of revenue, accounting for 13.5% of Amazon’s total revenue. Having grown steadily in the 30-percent range the past few quarters, AWS is a frontrunner to other cloud computing platforms such as competitor Microsoft Azure. So what is AWS and why is it so lucrative and successful for Amazon?
AWS is made up of so many different cloud computing products and services. The highly profitable Amazon division provides servers, storage, networking, remote computing, email, mobile development, and security. AWS can be broken into three main products: EC2, Amazon’s virtual machine service, Glacier, a low-cost cloud storage service, and S3, Amazon’s storage system. AWS is so large and present in the computing world that it’s far outpaced its competitors. As of February 2020, one independent analyst reports AWS has over a third of the market at 32.4%, with Azure following behind at half that amount 17.6%, and Google Cloud at 6%.
Jeff Bezos has likened Amazon Web Services to the utility companies of the early 1900s. One hundred years ago, a factory needing electricity would build its own power plant but, once the factories were able to buy electricity from a public utility, the need for pricey private electric plants subsided. AWS is trying to move companies away from physical computing technology and onto the cloud.
Traditionally, companies looking for large amounts of storage would need to physically build a storage space and maintain it. Storing on a cloud could mean signing a pricey contract for a large amount of storage space that the company could “grow into”. Building or buying too little storage could be disastrous if the business took off and expensive if it didn’t.
Since AWS’s cost is modified based on the customers’ usage, start-ups and small businesses can see the obvious benefits of using Amazon for their computing needs. In fact, AWS is great for building a business from the bottom as it provides all the tools necessary for companies to start up with the cloud. For existing companies, Amazon provides low-cost migration services so that your existing infrastructure can be seamlessly moved over to AWS.
As a company grows, AWS provides resources to aid in expansion and as the business model allows for flexible usage, customers will never need to spend time thinking about whether or not they need to re-examine their computing usage. In fact, aside from budgetary reasons, companies could realistically “set and forget” all their computing needs.
Arguably, Amazon Web Services is much more secure than a company hosting its own website or storage. AWS currently has dozens of data centers across the globe which are continuously monitored and strictly maintained. The diversification of the data centres ensures that a disaster striking one region doesn’t cause permanent data loss worldwide. Imagine if Netflix were to have all of its personnel files, content, and backed-up data centralized on-site on the eve of a hurricane. Chaos would ensue.
In fact, localising data in an easily identifiable location and where hundreds of people can realistically obtain access is unwise. AWS has tried to keep its data centres as hidden as possible, locating them in out-of-the-way locations and allowing access only on an essential basis. The data centres and all the data contained therein are safe from intrusions, and, with Amazon’s experience in cloud services, outages and potential attacks can be quickly identified and easily remedied, 24 hours a day. The same can’t be said for a small company whose computing is handled by a single IT specialist working out of a large office.
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