It has been a massive week in the cloud industry as AWS celebrated its 10th anniversary, Dropbox moved away from AWS and Apple shifted towards Google’s Cloud Platform.
Here is a synopsis of the major news from this week with analysis of what all of this means below.
1. AWS 10th birthday
On Monday, AWS celebrated the 10 year anniversary of the release of its first services. In the 10 year period that has followed the release of Amazon Simple Storage Service (S3); AWS has become the dominant public cloud player and is capable of offering 10 times the computing capacity than the next 14 competitors.
Speaking to CBR, Ian Massingham, UK technical evangelist for AWS said that a combination of two factors have helped with its success: "It’s that initial maybe right place right time with the API based access to these computing resources and then making use of the familiar Amazon cultural model of letting customers define the direction that our innovation takes.
"Those two things combined together I think are why we’ve been able to build this today."
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The question now for AWS is what is next. With increasing competition for enterprise customers a strategic move to aim its cloud as industries that haven’t widely adopted could be next. AWS is already being strongly linked with a move into the financial services market.
2. Dropbox drops AWS
The day after AWS celebrated its 10 year anniversary, Dropbox revealed that it has almost entirely moved away from the AWS cloud infrastructure.
The file sharing and storage service has built its success on the back of the AWS infrastructure and was one of the early adopters of the S3 service to store bulk data.
However, since 2013 it has been building its own storage infrastructure and it now meets more than 90% of its own storage needs.
Akhil Gupta, VP of engineering, Dropbox, wrote in a blog post to explain the move: "As the needs of our users and customers kept growing, we decided to invest seriously in building our own in-house storage system."
The undertaking has been dubbed Project Magic Project and it will help the company to optimise its storage systems to increase performance in addition to saving money through hardware and software optimisation of its storage needs.
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Dropbox appears to have decided that it has reached a size and scale that meant it was better off running its own data centres. Does this mean that the largest companies are better off running their own clouds and avoiding the cookie cutter models of an AWS, Google or Microsoft Azure?
3. Apple moves to Google Cloud Platform
Apple has piled on the punishment for Amazon Web Services by migrating some of its services to Google’s cloud platform.
In what is a big boost for Google’s enterprise cloud dreams, Apple decided to move a part of its iCloud services onto Google’s platform.
Given the growing requirements for storage and computing for Apple, the move is a big win for Google and a big loss for AWS.
The deal, which is said to be worth between $400 million and $600 million, will still see Apple as a customer of AWS.
A spokeswoman for AWS told TechCrunch: "It’s kind of a puzzler to us because vendors who understand doing business with enterprises respect NDAs with their customers and don’t imply competitive defection where it doesn’t exist."
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Google may have gained a big enterprise customer but it has had limited success in the market so far compared to the market leader AWS and second placed Microsoft Azure.
A diverse cloud strategy isn’t particularly uncommon, many businesses around the world already utilise numerous cloud services from different vendors.
Perhaps Apple felt safer using two leading cloud vendors rather than one, or perhaps, like many other businesses, it identified that cloud suppliers each have their own strengths and weaknesses.
4. Oracle cloud fails to make up for dropping revenue
Larry Ellison, chairman and CTO of Oracle was in typically bullish mood during the reporting of the company’s third quarter finances this week, saying: "In absolute dollar terms, Oracle is already selling more enterprise SaaS and PaaS new cloud revenue than any other company in the world — including Salesforce.com.
"We are growing much faster than Salesforce.com. We also have many more SaaS products than Salesforce.com."
The reason for this bullishness was due to total cloud revenues rising by 40% to $735m, SaaS and PaaS revenue growth accelerated to 61% in constant currency in the third quarter.
Despite this cloud growth, the company revealed some negative figures for total on-premise software; this dropped 4% to $6.3bn while total hardware revenue fell by 13% to $1.1bn.
Total services revenue were at $793 million, down 7% in US dollars.
Combined, this means that revenue for the quarter dropped 3% to $9.01bn, compared to $9.33bn in the same period last year.
Net income declined to $2.14bn from $2.50bn last year.
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Oracle has done well to show how quickly its cloud business is doing, but it is still early days. The company’s previously said that it wants to challenge AWS head-on. At the moment this seems unlikely but Big Red is seeing plenty of wins.
As highlighted by the movements of Dropbox and Apple, there is plenty of competition in the market and Oracle will have to find a way to differentiate itself.
5. AT&T heading to the cloud
The US telecom giant has revealed plans to move 80% of its applications into a private cloud by the end of this year.
This comes as part of the company’s on-going technology infrastructure revamp that sees it move one internal IT application into the cloud each day.
AT&T revealed this at the Open Networking Summit conference and is part of plans to bring both open hardware and cloud economics into the company’s infrastructure. It has said that by 2020 it will have virtualised 75% of its network, current virtualisation of the network stands at 5.7%.
Enhanced control, management and police software-defined networking software is the basis of the push to virtualising 75% of the network, this will be realised as open source and will work with the OpenStack architecture.
The company said that these moves will allow it to build its next generation cloud based network in a vendor-agnostic way. That will give it flexibility when it comes to deploying NFV/SDN in its network.
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What this boils down to is that cloud is enabling the company to be more agile, to open up new network opportunities and at a lower cost than it would be to maintain its existing network systems.
These benefits are the foundation on which cloud has risen to prominence; it is a vehicle to agility and new opportunities at a lower cost than previously possible.
What does it all mean?
It can safely be said that this has been a mixed week for Amazon Web Services. Turning 10 is a big milestone for the company and it is staggering to think that at just 10 years old it rules the public cloud market by a distance.
Yes there are competitors but Oracle is nowhere near AWS in terms of adoption and neither is Google really. Google may have got a big win in getting some of Apple’s business but it should be remembered that Apple is still a customer of AWS, there has not been a wholesale defection to a competitor.
The appetite for cloud is still strong and its benefits remain the same, highlighted by AT&T’s move to virtualise the majority of its network, however, Dropbox’s decision to operate its own storage infrastructure is one that should be a worry for cloud companies.
The move suggests is that the cookie cutter data centre model is not necessarily favourable to some businesses.
Dropbox clearly believes that it is better off optimising its hardware and software itself so that it is a better fit to its needs and that it can be done at a competitive price.
It is not certain whether there will be an impact on customers; there has been no mention of a price rise or fall, but they would likely expect an improved service or at least a service that is just as good as it was on AWS, any decline in standards could see Dropbox hit by a loss of customers.
Another frantic week ended with interest remaining high and the competition for enterprise clients escalating.
