Many people think of Amazon as a trillion dollar company because of its dominance in online retail. However, the truth differs slightly from what people believe. Amazon suffered losses of $1.57 billion in North America and $1.28 billion worldwide. So how does Amazon stay in business? Amazon Web Services (AWS) has been a lifeline for the digital titan, accounting for more than half of the company’s total capitalization. Therefore, it is safe to assume that this Amazon subsidiary has taken the computer industry by storm.
What is AWS and how did a side project at a tech giant become its backbone?
What is AWS?
AWS (Amazon Web Services) is a comprehensive, evolving cloud computing platform offered by Amazon that includes Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as- a-Service (SaaS) features. AWS services can provide an organization with computing power, database storage, and content delivery services, among other things.
AWS offers organizations and software developers a variety of tools and solutions that are compatible with data centers in up to 190 countries. AWS services can be used by government agencies, educational institutions, non-profit, and commercial organizations.
The AWS Origin Story: How it all began
The most well-known origin story for AWS is that it started when Amazon had excess computing capacity and wanted to rent it out to other companies. This myth persists, although it is not true. The true story follows a winding road that could easily have ended in a ditch. It is based on a concept that continues to define the evolution of AWS.
Amazon Web Services, the company’s cloud infrastructure as a service segment, started as a side business almost twenty years ago.
Many are amazed to hear that AWS’ beginnings can be traced back to the early 2000s, when Amazon was a very different company than it is today, a simple e-commerce company with scalability challenges. As the e-commerce operation struggled to turn a profit, Amazon began exploring new opportunities.
Benjamin Black led an Amazon website engineering team in 2003. Black then worked with Chris Pinkham to improve the scalability of Amazon’s infrastructure.
Amazon offered its first service, Simple Queue, in 2004, and AWS officially launched in 2006. AWS first offered Simple Storage Service (S3) and Elastic Compute Cloud (EC2), followed by Simple Queue Service (SQS). During 2009, S3 and EC2 were launched in Europe, the Elastic Block Store (EBS) was released, and Amazon CloudFront, a robust content delivery network (CDN), became an official component of the AWS service.
By 2010, Amazon migrated all of its online retail services to AWS. In 2012, Amazon hosted its first customer event in Las Vegas called re:Invent. Additionally, AWS began offering certification courses for computer engineers. AWS declared profitability in the third quarter of 2015 with $2.1 billion in revenue, becoming the leading cloud computing provider. Since then, AWS’ annual revenue from cloud computing and hosting services has gradually increased.
A pioneer in the cloud industry
Today, AWS is recognized as one of the leading cloud computing platforms in the world and is used by millions of customers, from small startups to large enterprises. The company is global, with data centers and infrastructure in different regions of the world.
However, what makes AWS such a big player and pioneer in the cloud industry? Here’s the business value that AWS offers over its traditional cloud computing counterparts.
Commercial capital costs for variable expenses
Switching to a pay-as-you-go approach to spending instead of paying everything upfront helps startups and smaller businesses expand quickly and cost-effectively.
Benefit from enormous economies of scale
With millions of other customers using AWS, you have access to a shared pool of resources, significantly reducing your costs compared to running your own data center.
Avoid speculating about ability
You don’t have to estimate capacity in advance because you can scale up or down as needed, based on your needs, without being limited by the amount you’ve allocated yourself.
Improve speed and dexterity
With AWS managed services, it is possible to launch apps in minutes. With a variety of easy-to-use development tools, you can initiate projects quickly and effectively.
Concentrate on the essentials
You can focus on your business use case and provide value to your customers because you don’t have to worry about provisioning servers, maintaining the facility, or managing staff.
Expand globally in minutes
You don’t have to worry about managing overseas hardware or end-user latency issues. Using AWS’s global infrastructure, you can launch apps close to your end users and quickly publish them worldwide.
The competition is catching up
According to Gartner, cloud computing will grow at 20% annually through 2026, significantly faster than any other area of information technology. Even so, AWS’s market dominance will certainly decrease as sales increase. With a 44% market share, AWS has a 20-point lead over Microsoft’s 24%, though that lead is shrinking. This discrepancy will be drastically reduced, if not eliminated, in the coming years. This is because many late adopter companies are entering the market and many companies will gravitate towards Microsoft due to their existing contractual relationship with the company.
Closing the gap with Microsoft is probably inevitable. The biggest potential challenge for AWS is maintaining the discipline that has made it a global titan.
At the top of its game, bigger and more powerful than its competitors, AWS must now face an enviable but daunting challenge: the curse of success. Maintaining the unbroken rigidity or discipline of its policies and procedures is its primary responsibility.
Diploma
AWS was started because Amazon needed to build out its own IT infrastructure. Since then it has grown into a multi-billion dollar company supporting Amazon’s IT backbone. The history of AWS is a testament to the power of innovation and the impact that cloud computing has had on the technology industry. AWS has revolutionized the traditional IT landscape and paved the way for a new era of computing that is more accessible, scalable, and efficient.
Want to learn more about AWS and how it can help your business? Check out the AWS Resource Library for all the information you need only in Whitepapers Online.
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