'In the next 10-20 years, very few companies will own data centres'

Q&A: Andy Jassy, Senior Vice-President, Amazon Web Services

One of the earliest proponents of Cloud Computing Amazon Web Services (AWS), the subsidiary of Amazon.com, entered the Asia Pacific region by setting up its data centre in Singapore recently. With clients like Patni Computer Systems, Hungama Digital Media Entertainment and Rediff.com among others in India, Andy Jassy, Senior Vice-President, Amazon Web Services believes India along with Australia and Singapore will see an increased uptake of cloud services. In an interview to Shivani Shinde, Jassy — who wrote the business plan seven years ago — outlined the latest trends cloud computing. Edited excerpts:

Are you happy with adoption of cloud services?
We are thrilled with the pace of adoption in this space. I wrote the business plan seven years ago in Mid-2003. We believed in the business and pursued it but did not anticipate this kind of adoption. Even among the enterprise segment, the adoption has been much faster than we anticipated. Amazon (retail business) is a $25 billion business. We believe our business can be at least as big as our retail business today and we believe this is going to be a large free cash flow generating business.

Last fall, we announced our plans to have some presence in the Asia-Pacific (APAC) region in the first half of 2010. We have done that now. Besides customers from APAC, Europe and the US have been asking us when we would be here. What this also means is smaller firms, start-ups and enterprises can now take advantage of our cloud computing platform and be able to turn capital expenses on data centres and servers to variable expenses as they need to just pay only when they use a particular service.

But today, there are players like Google, IBM and Microsoft offering cloud services...
We are ahead of others because of our value proposition. We always expected to have more players in this segment, but what differentiates us is that we launched the business four years ago but started working on it even before that. We started with Amazon retail and our goal was to grow the retail business. The retail business is a low margin business and hence we had to provide the best technology at a cost that was much affordable. So we know this business.

What trends do you see in the cloud computing adoption?
Customer feedback is critical for our platform in terms of feature launches. In terms of trends, apart from the services expansion, we always expected start-ups to be the early adopters of our services since they do not have to spend crazy money on infrastructure but get the same scale and infrastructure as any large enterprise. The enterprise adoption patterns are 18-24 month quicker than what we anticipated. I think some of that relates to the fact that the operational performance of services has been good, the buzz associated with cloud, and some of it also relates to the economy getting impacted.

Private cloud is a concept being sold to enterprises. Kindly explain.
I think in the next 10-20 years, very few companies will own data centres. Even those that do, would have a limited footprint. The cloud computing space will be massive, which means it’s going to be a high volume and relatively low margin business. That is a different view of the business from the present, where technology providers for the last 30 years have got used to 70-80 per cent of gross margins. Hence, a lot of companies are not too excited about this computing space. Many of these firms then are continuing to do what they have been doing but attach the word cloud to it. Private cloud is one such example. At the end of the day, it is a large expensive private extension that misses almost all the key advantages of cloud. You still own the capital expenses - it is not pay for what you use and is not flexible. The companies still own all the resources. And you still have to manage it.