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AWS re:Invent: Billions & Billions of Dollars

AWS re:Invent

The massive AWS re:Invent show this week in Las Vegas is a celebration of cloud computing. What was formerly debatable is now inevitable: the world is moving to cloud.

Amazon’s annual cloud revenues of about $7 billion, combined with an estimated $5 billion annual run rate by competitor Microsoft Azure, and the odd billion here and there from other providers show cloud’s inexorable rise.

The excitement of the past few days obscures what I think is still the fundamental issue of defining what cloud computing really is. AWS and the rest of the public-cloud providers still command just a small fraction of overall enterprise IT spend, and I remain of the opinion that yes, private cloud is real cloud and is much more significant than public cloud.

cloud-open

If we look at the early success of VMware, then segue to the emerging microservices-and-containers approach, we will see significant chunks of enterprise IT becoming cloud-ish at minimum and true cloud at optimum. VMware’s annual revenue of more than $6 billion is in the same ballpark as that of AWS.

But I would argue that VMware represents the tip of an iceberg that must also include all the underlying hardware being used for on-premises cloud, whereas AWS revenue is an inclusive service that accounts for the hardware. In other words, VMware represents a larger share of enterprise IT spend than AWS, by far.

I’ve had many conversations recently with data center operators, and thereby been exposed to this vast world of real estate, big buildings, electricity bills, and people who manage tens of thousands of servers at a time.

This group is skeptical of interacting with abstract, public clouds “out there” somewhere, as their entire careers are built on securing company data. The recent rejection of Safe Harbor privacy agreements by the EU’s top court hardens this group further against letting their organizations’ data escape their confines and control.

Public cloud services are seen as nice backup, redundancy, and overflow resources in emerging “hybrid” clouds, but not anywhere to store the keys to the kingdom. Private cloud is still at least a magnitude larger than public, and may even grow more quickly than public as a generation of tools such as Cloud Foundry, OpenShift, Docker, Puppet, Chef—and don’t forget OpenStack—gain credence and traction.

You’re Scaring Me, Boss

boss (2)

Meanwhile, a couple of announcements at re:Invent should raise some hairs on the backs of necks. First, the trumpeted new partnership between AWS and Accenture means that public cloud has truly arrived to enterprise IT. Large enterprises now have the opportunity to be charged hundreds of dollars per hour for young people to explain to them how to read Amazon’s online information on how to provision instances. The revolution is dead, and shadow IT will soon be a shadow of its former self.

The second scary announcement was that of AWS Inspector, a service that finds potential security and compliance vulnerabilities. This is a great new feature, to be sure, but is also something that third parties can solve.

This move reminds one of the bad old days of Microsoft. Woe betide anyone cheeky enough in the 80s and 90s to create something that Redmond couldn’t yet do. Look across Lake Washington today to Seattle, and woe betide you again.

By Roger Strukhoff

Roger Strukhoff

Roger Strukhoff has spent 25+ years in Silicon Valley and other technology regions. He was an Editorial Director and Publisher at IDG; served as Director, Global Publications at Tibco Software; and is co-founder of JavaOne and Cloud Expo. He founded the Tau Institute for Global ICT Research in Asia in 2011. He has been named one of the Top 50 IoT Thought Leaders in the World. He received his BA from Knox College, Certificate in Technical Writing from UC-Berkeley, and conducted MBA studies at Cal State-East Bay.

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