AMAZON WEB SERVICES

GROUP 6, MIPAS – B

SRIRAM A027 SAMRUDDHI MODAK A043 PRERNA PAHUJA A045

PRAGYA GUPTA A067 PRASHANTH BHASKARAN D012 JAGRITI DHAWAN F017
APOORVA SOMANI H058
 Back ground on Amazon
Year Amazon business
1995 Launched website with the aim of becoming “Earth’s biggest
bookstore”
1997 Went public. Recorded sales of $147.8 million compared to $15.7

Introduc
million he previous year.
1998 Added music, videos, toys and electronics with the goal of
becoming a mass merchandiser

tion
1999 Allowed outside merchants to operate virtual storefronts on
Amazon’s website
2002-08 Additional product lines of clothing, video downloads, digital
music, Kindle along with the launch of AWS in 2003

 Amazon was known for its entrepreneurial culture and its focus on long term financial results
 Since its inception, the company invested heavily to build a sophisticated web infrastructure which was integral to their
business model of massive online retail.
 The company recognised AWS as an opportunity for Amazon to lead into cloud computing
 By 2008, AWS had launched 4 major services including Elastic Compute Cloud and Simple storage service
 Other competitors like Google, IBM, Microsoft also showed ken interest to offer internet based technology services
 Amazon considered the following criteria in assessing new businesses- a) generating significant returns, b) scaling
substantially, c) addressing an underserved market, d) being highly differentiated and e) an opportunity that Amazon is
well positioned to provide.
 Evolution and History

 Started experimenting with web services in 2002 in conjunction with the Associates group (various
businesses that advertised amazon products on their websites; drove traffic to Amazon through links and
earned 5-8% commissions)

 Amazon released its product information as APIs so that Associates websites can present it according to
their own preferences in order to drive sales

 Three main things that came into notice after API release - 1) excitement amongst developers about the

Overvie fact that Amazon was opening up its platform, 2) the innovation with which they built the front end to
merchandise the products, 3) the fact that people were building commercial applications from the start

 During the test release the developers said they wanted Amazon to open up more of its platform in addition

w of
to the products base. In retrospect, this made Amazon think and consider the possibility of using the
Internet as an OS for developing commercial applications.

 Not many elements of the Internet which would make it functional as an OS were available. Amazon
realised it could provide a lot of these building blocks

AWS  Amazon unknowingly built the base for AWS from the very beginning by building the entire Amazon
ecosystem from scratch using technology that was deeply embedded in the system. Things like data
storage, computing, database functionality, and message were layered deep in the software stack and were
inimitable

 The company also leveraged the relationship it had built with software and hardware technology companies
which provided the parts for AWS. Just like the retail business, Amazon could capitalize on its first-mover
advantage in this technology development business as well

 In order to determine where to start, the company used three mechanisms – 1) feedback from internal
teams about the things they had to keep reinventing every time they had to build a new application, 2)
insights from business and technology leaders from across the company about a variety of Internet
applications that existed and could be used to build Amazon web services, 3) suggestions from external
developers who had been working on the Amazon API which was made available to the Associates group

 Services needed to meet a lot of requirements like reliability, scalability, low-latency, simple and fast, and
last but not the least cost-effective
 Organizational Structure

 Foundational infrastructure services team put together by Jassy

Overvie
 Small, autonomous teams for each service with engineers from
both within and outside Amazon recruited to them. Each team
had a general manager and included members from both
business as well as technical backgrounds

w of  Fresh MBA graduates put in leadership positions

The teams were responsible for defining, building, operating, and

AWS
running the service like a business with its own profit and loss
statement.
 AWS Services
Simple Storage Service (S3) Amazon Flexible Payment Service (Amazon
• Storage and retrieval of data from FPS)
anywhere on the web • Collect funds electronically from customers
• Example: Microsoft distributed copies of • Offered flexibility for developers to define the
Vista softwares conditions of the transactions

Elastic Compute Cloud (EC2) Amazon Premium Support

• Resizable computing capacity in the cloud • Technical assistance to customers
• Example: Powerset Inc., cut their capital
costs by more than half

SimpleDB
• Real-time lookup & querying of structured
data
• Designed to work in conjunction with S3
and EC2 Amazon Elastic Block Storage(EBS)
• When EC2 instances were terminated, the
Simple Queue Service
data within the instance was lost
• Stores data messages as they travel between
• EBS allowed users to allocate storage volumes
applications
 Market Dynamics

The digital infrastructure market grew from $196 billion in

2006 to $225 billion in 2009

AWS wasn’t meant to be very profitable in the short run, but

had the potential to generate an incremental $200 million in
annual revenue down the road, with 50% incremental margins
 Competition

Network
Appliance • Few of the new companies provided
subscription based online storage similar to
Dell
Computer Sun Amazon S3, and very few of these
Corp
Traditional
continued to exist post the dot-com boom
Storage
Market
Competitors • SSPs were to be big deal in future as
EMC
Corporatio HP compared to the time they were launched
n
in market
IBM
• Customers slowly get accustomed to the
idea of paying for Storage as a Service
 Amazon was ahead of Microsoft also launched
the big internet giants office suites, to
in in hosting web-based compete with storage
services for customers as service

Competitio
Google introduced App

n Engine, which had a

scalable infrastructure
with a custom pricing
Salesforce offered a
CRM software, and later
model per user, and launched AppExchange.
was expected to
compete with AWS.
 Amazon’s Advantage

Its complete focus was on

AWS believed that its
this one product, as it did not
services were well positioned
intend to launch any other
wrt ease of use, pricing,
products in the IT space,
scalability, performance and
hence no risk of
ability to set up and use.
cannibalization.
  Pricing
 Aggressive Pricing – No upfront fee, No minimum bill,
Pay-per-use model
 Tremendous response, developers liked how AWS
allowed businesses to reach market faster
 Wall Street and the press was still sceptical about
AWS and considered it to be drain on the profitability

Challenges of Amazon

 Capacity Management & Service Releases

for AWS  How elastic should AWS servers be a major concern
 Animoto grew from 20 machines to 3400 machines
in a 5 days
 AWS has to be prepared to handle such demands
 Service Releases had to be well tested. A glitch in
hardware performance of Amazon S3 caused a
temporary outage
  Cloud computing would put IT departments out of
business

 Amazon’s Position
 Technological competence
 Reliable and Scalable services
 First mover advantage
 Ability to execute quickly
 Competition

Looking
Ahead  Challenges
 Scrutiny from capital markets
 AWS Business Model
 Driving high volume
 Utilization of products and services to reduce cost
and increase FCF

 Need to expand and broaden the mix of AWS’s

customer base

 They have the core assets and unique set of skills to be

leader in cloud computing
Thank You!