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Web services poised to become Amazon's prime moneymaker

Andy Jassy

Andy Jassy

LAS VEGAS — Most consumers think of as an online bookseller or, increasingly, as a digital marketplace where they can buy everything from diapers to giant flat-panel TVs.

But the one division that may eventually trump them all in terms of revenue is Amazon's deeply geeky business of selling infrastructure computer services to other companies over the Internet. Robert W. Baird & Co. analyst Colin Sebastian estimates that Amazon Web Services, or AWS, launched 7½ years ago, is generating $3 billion a year.

The executive running the business, Andy Jassy, has little doubt that one day, AWS will be the company's biggest sales engine. No company may be better positioned than Amazon — which pioneered cloud computing, the business of providing infrastructure computing as a service — to capture those dollars. It recently beat out IBM on a $600 million contract with the CIA.

Jassy chatted with the Seattle Times at re: Invent, AWS' annual conference in Las Vegas, about the division's prospects.

As the second re: Invent comes to a close, what have you learned?

I think we're really past the stage of people asking whether or not workloads are moving to the cloud. The only question is how fast will it happen and which ones will go first.

There are many companies with IT departments that are terrified of moving to cloud computing because it's technology with which they are not familiar and it threatens the way they've done business for years. So how do you get them over that hurdle?

A lot of it is education. … Another thing is training. We train tens of thousands of customers all over the world. And what we find is most people find it's pretty easy to use.

You had a bit of fun in your keynote speech referring to IBM as "old guard." How big of a threat are they to AWS' growth?

From the beginning of our thinking about AWS, we always expected there would be multiple companies in the space. One of the surprising things to us is that it's taken them so long to enter.

We have a 7½-year head start on all these technology platforms launching. When we talk with customers, typically, the alternatives they are considering from AWS are their current on-premises solutions. It's quite interesting to see how fast the business is growing. We believe it has the potential to be the largest business at Amazon one day.

The CIA contract was a big win for you because it spoke to some customers' concerns about reliability and security. How do you build on that?

The CIA contract was a further credibility builder for us in the public sector, but also in the enterprise. Virtually every enterprise we've talked with over the last six months has asked us about the CIA deal. For many of them, if the security and operational performance works for an entity like the CIA, it will work for them as well.

Web services poised to become Amazon's prime moneymaker 11/22/13 [Last modified: Friday, November 22, 2013 8:34pm]
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