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Originally published Thursday, November 14, 2013 at 6:17 PM

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Conference an opportunity for Amazon to recognize partners on AWS platform

The Web giant’s technology platform is evolving into a business where partners can make money and help Amazon battle rivals.


Seattle Times business reporter

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LAS VEGAS — Amazon Web Services (AWS) so likes to trot Netflix as a case study that Chief Technical Officer Werner Vogels said he understood people listening to his speech about the business Thursday were playing a drinking game where they had to down a shot of liquor every time he mentioned the company.

And while most viewers would have been buzzed pretty quickly at his keynote address during an AWS conference here Thursday, they would have had some long breaks between shots. While Netflix is a marquee customer that uses AWS technology throughout its operations, there are plenty others that are using the technology to run key pieces of its business.

AWS, the online giant’s business that sells computing services to other companies, may well be at an inflection point. Amazon.com doesn’t disclose sales of the unit. But analysts pegged annual revenue at roughly $2 billion a year ago. Now, Robert W. Baird & Co. analyst Colin Sebastian thinks AWS is generating $3 billion a year on an annualized basis.

At the conference, Amazon is highlighting tech upstarts that run operations on AWS, such as Airbnb, which lets people rent rooms, apartments and homes to travelers, and Dropcam, which sells wireless video monitoring cameras.

But Amazon also called out traditional corporate clients such the Securities and Exchange Commission (SEC) and Australian financial-services firm Suncorp.

Maybe more important, plenty of companies have come to the conference here to sell services, such as Capgemini and Accenture, which help clients use AWS. And there are smaller ones, too, such as 2nd Watch, which assists in the migration to AWS, and ExtraHop, which provides data analysis on AWS.

“There are thousands of opportunities for our partners,” said Adam Selipsky, vice president for product management and developer relations at AWS. “There’s no way Amazon can do that all.”

In the emerging business of so-called cloud computing, Amazon is well ahead of rivals such as IBM and Microsoft, according to research firm Gartner. That is bringing more partners to the AWS platform, building applications and services to sell to customers. That, in turn, is luring more businesses to use AWS.

That’s what Amazon executives often refer to as the flywheel effect — the idea that a core business gets stronger as features are added, bringing in more customers, which, in turn, encourages partners to build on top of the service.

“That really gets the flywheel spinning,” Selipsky said.

And those partners aren’t just boosting AWS’ business. They are building a bulwark around it, making it harder for rivals that don’t offer similar services to compete.

This is creating a cottage industry around AWS. Venture capitalists are seeking out startups building their businesses around AWS. Seattle-based Madrona Venture Group is an early backer of several, including both 2nd Watch and ExtraHop.

“We’re in the early innings, and we’re in an important shift from people building new apps on AWS to people leveraging all the things on AWS to help their business,” said Matt McIlwain, a Madrona managing director.

And AWS has so much of a “prohibitive” lead in the business that McIlwain said he’ll think twice before investing in startups focused on rival technology.

“We’re going to say, ‘Why did you make that choice?’ ” McIlwain said.

Jay Greene: 206-464-2231 or jgreene@seattletimes.com. Twitter: iamjaygreene



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