Amazon CEO says AWS staff now spending ‘much of their time’ optimizing customers’ clouds
(2023/04/17)
- Reference: 1681712829
- News link: https://www.theregister.co.uk/2023/04/17/amazon_annual_shareholder_letter_aws/
- Source link:
Amazon Web Services sales and support teams are currently “spending much of their time helping customers optimize their AWS spend so they can better weather this uncertain economy.”
So said Amazon.com CEO Andy Jassy in his [1]annual letter to shareholders published last week.”
“In AWS, like all our businesses, we’re not trying to optimize for any one quarter or year,” the CEO explained. Instead, all of Amazon is “trying to build customer relationships (and a business) that outlast all of us; and as a result, our AWS sales and support teams are spending much of their time helping customers optimize their AWS spend so they can better weather this uncertain economy.”
[2]
“Many of these AWS customers tell us that they’re not cost-cutting as much as cost-optimizing so they can take their resources and apply them to emerging and inventive new customer experiences they’re planning,” he added. “Customers have appreciated this customer-focused, long-term approach, and we think it’ll bode well for both customers and AWS.”
[3]
[4]
“While these short-term headwinds soften our growth rate, we like a lot of the fundamentals that we’re seeing in AWS,” Jassy added. Those fundamentals include “robust” pipelines for new customers and active migrations.
AWS wants to cook its datacenter chips with vegetable oil [5]READ MORE
“Many companies use discontinuous periods like this to step back and determine what they strategically want to change, and we find an increasing number of enterprises opting out of managing their own infrastructure, and preferring to move to AWS to enjoy the agility, innovation, cost-efficiency, and security benefit,” he wrote.
That list does not include cost savings, a factor that has seen [6]SaaS outfit 37Signals quit the cloud and software vendor Ahrefs [7]estimate that operating its own hardware in a colo datacenter saves it $400 million.
When The Register speaks to vendors of on-prem hardware, we hear similar messages about customers quitting the cloud to save money. One analyst of our acquaintance, however, likened such reports to accounts of migration from California to other US states with higher growth rates: plenty leave and complain loudly on their way out, but plenty more arrive.
[8]
Back to Jassy’s letter, which also mentions AWS’s intention to develop more custom silicon.
“We’re not close to being done innovating here, and this long-term investment should prove fruitful for both customers and AWS,” he wrote, referring to the Inferentia silicon aimed at machine learning workloads. The CEO also talked up the improved price/performance of the Graviton CPU, although cloudy analyst Corey Quinn [9]disputed that claim, tweeting “r Graviton2 --> Graviton3 instance equivalents are over 6% *more* expensive like-for-like.”
Jassy also observed that AWS’s run revenue rate is now $85 billion a year and grew 29 per cent year on year from $62 billion in 2022. That makes AWS bigger than Cisco, Lenovo, HPE, Oracle, and SAP. Of Dell’s $102 billion FY 2023 revenue, $89.4 billion was won from businesses – AWS is just $4 billion behind that sum now and closing fast. Microsoft’s “more personal computing” business earned almost $60 billion of the company’s $198 billion FY 22 revenue; leaving its business-derived revenue a few years of growth ahead of AWS’s.
[10]
Yet as Jassy observed, “with about 90% of Global IT spending still on-premises and yet to migrate to the cloud” AWS still has plenty of upside.
His letter argues that other Amazon businesses are earlier in their development than AWS, so while the economic climate will be reflected in some wobbles that make investors feel jittery, Amazon is investing in new businesses that will fuel future growth.
Exhibit A for the prospects of that plan is AWS itself, which Amazon funded extensively during the global financial crisis of 2007 and 2008.
[11]Just because on-prem is cheaper doesn’t make the cloud a money pit
[12]AWS debuts generative AI stuff so smart you might give it your money twice
[13]AWS security exec: You don't want to win this database popularity contest
[14]Amazon lays off another 9,000, because why not?
Jassy argued that Amazon’s “Kuiper” satellite broadband service is now at the same stage as AWS during that downturn.
“It’s capital intensive at the start, but has a large prospective consumer, enterprise, and government customer base, significant revenue and operating profit potential, and relatively few companies with the technical and inventive aptitude, as well as the investment hypothesis to go after it,” he wrote.
“We’re preparing to launch two prototype satellites to test the entire end-to-end communications network this year, and plan to be in beta with commercial customers in 2024,” he added. “The customer reaction to what we’ve shared thus far about Kuiper has been very positive, and we believe Kuiper represents a very large potential opportunity for Amazon.” ®
Get our [15]Tech Resources
[1] https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2022-letter-to-shareholders
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/03/20/aws_wants_to_cook_its/
[6] https://www.theregister.com/2023/02/22/cloud_repatration_savings_calculated_basecamp/
[7] https://www.theregister.com/2023/03/13/ahrefs_on_prem_savings/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://twitter.com/QuinnyPig/status/1646961789958074368
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/04/11/cloud_dc_costs/
[12] https://www.theregister.com/2023/04/14/aws_bedrock_api_ec2/
[13] https://www.theregister.com/2023/03/28/aws_ciso_director_database_security/
[14] https://www.theregister.com/2023/03/20/amazon_9000_layoffs/
[15] https://whitepapers.theregister.com/
So said Amazon.com CEO Andy Jassy in his [1]annual letter to shareholders published last week.”
“In AWS, like all our businesses, we’re not trying to optimize for any one quarter or year,” the CEO explained. Instead, all of Amazon is “trying to build customer relationships (and a business) that outlast all of us; and as a result, our AWS sales and support teams are spending much of their time helping customers optimize their AWS spend so they can better weather this uncertain economy.”
[2]
“Many of these AWS customers tell us that they’re not cost-cutting as much as cost-optimizing so they can take their resources and apply them to emerging and inventive new customer experiences they’re planning,” he added. “Customers have appreciated this customer-focused, long-term approach, and we think it’ll bode well for both customers and AWS.”
[3]
[4]
“While these short-term headwinds soften our growth rate, we like a lot of the fundamentals that we’re seeing in AWS,” Jassy added. Those fundamentals include “robust” pipelines for new customers and active migrations.
AWS wants to cook its datacenter chips with vegetable oil [5]READ MORE
“Many companies use discontinuous periods like this to step back and determine what they strategically want to change, and we find an increasing number of enterprises opting out of managing their own infrastructure, and preferring to move to AWS to enjoy the agility, innovation, cost-efficiency, and security benefit,” he wrote.
That list does not include cost savings, a factor that has seen [6]SaaS outfit 37Signals quit the cloud and software vendor Ahrefs [7]estimate that operating its own hardware in a colo datacenter saves it $400 million.
When The Register speaks to vendors of on-prem hardware, we hear similar messages about customers quitting the cloud to save money. One analyst of our acquaintance, however, likened such reports to accounts of migration from California to other US states with higher growth rates: plenty leave and complain loudly on their way out, but plenty more arrive.
[8]
Back to Jassy’s letter, which also mentions AWS’s intention to develop more custom silicon.
“We’re not close to being done innovating here, and this long-term investment should prove fruitful for both customers and AWS,” he wrote, referring to the Inferentia silicon aimed at machine learning workloads. The CEO also talked up the improved price/performance of the Graviton CPU, although cloudy analyst Corey Quinn [9]disputed that claim, tweeting “r Graviton2 --> Graviton3 instance equivalents are over 6% *more* expensive like-for-like.”
Jassy also observed that AWS’s run revenue rate is now $85 billion a year and grew 29 per cent year on year from $62 billion in 2022. That makes AWS bigger than Cisco, Lenovo, HPE, Oracle, and SAP. Of Dell’s $102 billion FY 2023 revenue, $89.4 billion was won from businesses – AWS is just $4 billion behind that sum now and closing fast. Microsoft’s “more personal computing” business earned almost $60 billion of the company’s $198 billion FY 22 revenue; leaving its business-derived revenue a few years of growth ahead of AWS’s.
[10]
Yet as Jassy observed, “with about 90% of Global IT spending still on-premises and yet to migrate to the cloud” AWS still has plenty of upside.
His letter argues that other Amazon businesses are earlier in their development than AWS, so while the economic climate will be reflected in some wobbles that make investors feel jittery, Amazon is investing in new businesses that will fuel future growth.
Exhibit A for the prospects of that plan is AWS itself, which Amazon funded extensively during the global financial crisis of 2007 and 2008.
[11]Just because on-prem is cheaper doesn’t make the cloud a money pit
[12]AWS debuts generative AI stuff so smart you might give it your money twice
[13]AWS security exec: You don't want to win this database popularity contest
[14]Amazon lays off another 9,000, because why not?
Jassy argued that Amazon’s “Kuiper” satellite broadband service is now at the same stage as AWS during that downturn.
“It’s capital intensive at the start, but has a large prospective consumer, enterprise, and government customer base, significant revenue and operating profit potential, and relatively few companies with the technical and inventive aptitude, as well as the investment hypothesis to go after it,” he wrote.
“We’re preparing to launch two prototype satellites to test the entire end-to-end communications network this year, and plan to be in beta with commercial customers in 2024,” he added. “The customer reaction to what we’ve shared thus far about Kuiper has been very positive, and we believe Kuiper represents a very large potential opportunity for Amazon.” ®
Get our [15]Tech Resources
[1] https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2022-letter-to-shareholders
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/03/20/aws_wants_to_cook_its/
[6] https://www.theregister.com/2023/02/22/cloud_repatration_savings_calculated_basecamp/
[7] https://www.theregister.com/2023/03/13/ahrefs_on_prem_savings/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://twitter.com/QuinnyPig/status/1646961789958074368
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZD0Yv8wIzltXWVcT0V-hAgAAAcc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/04/11/cloud_dc_costs/
[12] https://www.theregister.com/2023/04/14/aws_bedrock_api_ec2/
[13] https://www.theregister.com/2023/03/28/aws_ciso_director_database_security/
[14] https://www.theregister.com/2023/03/20/amazon_9000_layoffs/
[15] https://whitepapers.theregister.com/
Re: Chicken, welcome to the roost...
GroovyLama
Not necessarily...
I have a friend who works at AWS, and his role is specifically to optimise customers AWS usage. As he puts it, his target is to save customers money.
The first customer he worked with had done a typical lift and shift of an entire server into AWS EC2. After just a few hours of reviewing what they were doing he was able to propose changes that would get their annual costs from in the multiple thousands down to $100/year for that one server. And this hasn't been just a one off for him.
There is still a lot of naivety in the minds of people (perhaps within management more?) about how to move from on prem into the cloud. Lift and shift as a phase 1 is usually how they start, and then the inevitable happens and phase 2 never happens to actually benefit from potential cost savings. Then the surprise at lack of expected savings.
Of course everyone's experiences will be different, so YMMV.
Re: Chicken, welcome to the roost...
Electric Panda
I've oft-compared using the cloud to be much like using takeaways and restaurants vs. cooking for yourself.
Sure, it's easier, you don't have to know how to cook, you can be lazy about it (up to a point), talented experts can come up with things you never imagined, you have outsourced your energy costs, and so on. But you pay a premium for it and are fully reliant on others to make it all work.
Re: Chicken, welcome to the roost...
MatthewSt
None of these will be special deals, they'll just be setting people up with commitment discounts or right-sizing VMs (as 2 examples)
Chicken, welcome to the roost...
Or, to cut through the corporate bullshit.... (please replace the cloud-provider with the any of the others - it's still relevant for them all!)
Amazon:
"We recognise that the utopia of low-cost we sold to customers was a myth. Our customers have recognised they are spending 2x/3x what they did when they self-hosted.
We are absolutely desperate to retain our customers, before they go back to what they used to do"
Customer:
"We now recognise that we were sold a dud/lemon. We now recognise that maintaining the cloud infrastructure still requires us to pay staff to maintain it. We now recognise that our original pre-cloud setup was cheap!! "
99.9% of customers....
The end.