Amazon Web Services
Type of site
|Key people||Andy Jassy (CEO)|
|Industry||Web service, cloud computing|
|Revenue||$25.6 billion (2018)|
|Operating income||$7.2 billion (2018)|
Amazon Web Services (AWS) is a subsidiary of Amazon that provides on-demand cloud computing platforms and APIs to individuals, companies, and governments, on a metered pay-as-you-go basis. In aggregate, these cloud computing web services provide a set of primitive abstract technical infrastructure and distributed computing building blocks and tools. One of these services is Amazon Elastic Compute Cloud, which allows users to have at their disposal a virtual cluster of computers, available all the time, through the Internet. AWS's version of virtual computers emulate most of the attributes of a real computer including, hardware central processing units (CPUs) and graphics processing units (GPUs) for processing, local/RAM memory, hard-disk/SSD storage; a choice of operating systems; networking; and pre-loaded application software such as web servers, databases, customer relationship management (CRM), etc.
The AWS technology is implemented at server farms throughout the world, and maintained by the Amazon subsidiary. Fees are based on a combination of usage which is known as "Pay-as-you go" model, the hardware/OS/software/networking features chosen by the subscriber, required availability, redundancy, security, and service options. Subscribers can pay for a single virtual AWS computer, a dedicated physical computer, or clusters of either. As part of the subscription agreement, Amazon provides security for subscribers' system. AWS operates from many global geographical regions including 6 in North America.
In 2017, AWS comprised more than 90 (165 as of 2019) services spanning a wide range including computing, storage, networking, database, analytics, application services, deployment, management, mobile, developer tools, and tools for the Internet of Things. The most popular include Amazon Elastic Compute Cloud (EC2) and Amazon Simple Storage Service (Amazon S3). Most services are not exposed directly to end users, but instead offer functionality through APIs for developers to use in their applications. Amazon Web Services' offerings are accessed over HTTP, using the REST architectural style and SOAP protocol.
Amazon markets AWS to subscribers as a way of obtaining large scale computing capacity more quickly and cheaply than building an actual physical server farm. All services are billed based on usage, but each service measures usage in varying ways. As of 2017, AWS owns a dominant 34% of all cloud (IaaS, PaaS) while the next three competitors Microsoft, Google, and IBM have 11%, 8%, 6% respectively according to Synergy Group.
The AWS platform was launched in July 2002.  In its early stages, the platform consisted of only a few disparate tools and services. Then in late 2003, the AWS concept was publicly reformulated when Chris Pinkham and Benjamin Black presented a paper describing a vision for Amazon's retail computing infrastructure that was completely standardized, completely automated, and would rely extensively on web services for services such as storage and would draw on internal work already underway. Near the end of their paper, they mentioned the possibility of selling access to virtual servers as a service, proposing the company could generate revenue from the new infrastructure investment. In November 2004, the first AWS service launched for public usage: Simple Queue Service (SQS). Thereafter Pinkham and lead developer Christopher Brown developed the Amazon EC2 service, with a team in Cape Town, South Africa.
Amazon Web Services was officially re-launched on March 14, 2006, combining the three initial service offerings of Amazon S3 cloud storage, SQS, and EC2. The AWS platform finally provided an integrated suite of core online services, as Chris Pinkham and Benjamin Black had proposed back in 2003, as a service offered to other developers, web sites, client-side applications, and companies. Andy Jassy, AWS founder and vice president in 2006, said at the time that Amazon S3 (one of the first and most scalable elements of AWS) "helps free developers from worrying about where they are going to store data, whether it will be safe and secure, if it will be available when they need it, the costs associated with server maintenance, or whether they have enough storage available. Amazon S3 enables developers to focus on innovating with data, rather than figuring out how to store it.". In 2016 Jassy was promoted to CEO of the division. Reflecting the success of AWS, his annual compensation in 2017 hit nearly $36 million.
To support industry-wide training and skills standardization, AWS began offering a certification program for computer engineers, on April 30, 2013, to highlight expertise in cloud computing.
James Hamilton, an AWS engineer, wrote a retrospective article in 2016 to highlight the ten-year history of the online service from 2006 to 2016. As an early fan and outspoken proponent of the technology, he had joined the AWS engineering team in 2008.
Growth and profitability
In November 2010, it was reported that all of Amazon.com's retail sites had migrated to AWS. Prior to 2012, AWS was considered a part of Amazon.com and so its revenue was not delineated in Amazon financial statements. In that year industry watchers for the first time estimated AWS revenue to be over $1.5 billion.
In April 2015, Amazon.com reported AWS was profitable, with sales of $1.57 billion in the first quarter of the year and $265 million of operating income. Founder Jeff Bezos described it as a fast-growing $5 billion business; analysts described it as "surprisingly more profitable than forecast". In October 2015, Amazon.com said in its Q3 earnings report that AWS's operating income was $521 million, with operating margins at 25 percent. AWS's 2015 Q3 revenue was $2.1 billion, a 78% increase from 2014's Q3 revenue of $1.17 billion. 2015 Q4 revenue for the AWS segment increased 69.5% y/y to $2.4 billion with 28.5% operating margin, giving AWS a $9.6 billion run rate. In 2015, Gartner estimated that AWS customers are deploying 10x more infrastructure on AWS than the combined adoption of the next 14 providers.
In 2016 Q1, revenue was $2.57 billion with net income of $604 million, a 64% increase over 2015 Q1 that resulted in AWS being more profitable than Amazon's North American retail business for the first time. In the first quarter of 2016, Amazon experienced a 42% rise in stock value as a result of increased earnings, of which AWS contributed 56% to corporate profits.
- On March 14, 2006, Amazon said in a press release: "More than 150,000 developers have signed up to use Amazon Web Services since its inception."
- In November 2012, AWS hosted its first customer event in Las Vegas.
- On May 13, 2013, AWS was awarded an Agency Authority to Operate (ATO) from the U.S. Department of Health and Human Services under the Federal Risk and Authorization Management Program.
- In October 2013, it was revealed that AWS was awarded a $600M contract with the CIA.
- During August 2014, AWS received Department of Defense-Wide provisional authorization for all U.S. Regions.
- During the 2015 re:Invent keynote, AWS disclosed that they have more than a million active customers every month in 190 countries, including nearly 2,000 government agencies, 5,000 education institutions and more than 17,500 nonprofits.
- On April 5, 2017, AWS and DXC Technology (formed from a merger of CSC and HPE's Enterprise Services Business) announced an expanded alliance to increase access of AWS features for enterprise clients in existing data centers.
In 2019 it was reported that more than 80 % of Germany's listed DAX companies use AWS.
Significant service outages
- On April 20, 2011, AWS suffered a major outage. Parts of the Elastic Block Store (EBS) service became "stuck" and could not fulfill read/write requests. It took at least two days for service to be fully restored.
- On June 29, 2012, several websites that rely on Amazon Web Services were taken offline due to a severe storm in Northern Virginia, where AWS' largest data center cluster is located.
- On October 22, 2012, a major outage occurred, affecting many sites such as Reddit, Foursquare, Pinterest, and others. The cause was a memory leak bug in an operational data collection agent.
- On December 24, 2012, AWS suffered another outage causing websites such as Netflix to be unavailable for customers in the Northeastern United States. AWS cited their Elastic Load Balancing (ELB) service as the cause.
- On February 28, 2017, AWS experienced a massive outage of S3 services in its Northern Virginia region. A majority of websites which relied on AWS S3 either hung or stalled, and Amazon reported within five hours that AWS was fully online again. No data has been reported to have been lost due to the outage. The outage was caused by a human error made while debugging, that resulted in removing more server capacity than intended, which caused a domino effect of outages.
Availability and topology
Each region is wholly contained within a single country and all of its data and services stay within the designated region. Each region has multiple "Availability Zones", which consist of one or more discrete data centers, each with redundant power, networking and connectivity, housed in separate facilities. Availability Zones do not automatically provide additional scalability or redundancy within a region, since they are intentionally isolated from each other to prevent outages from spreading between Zones. Several services can operate across Availability Zones (e.g., S3, DynamoDB) while others can be configured to replicate across Zones to spread demand and avoid downtime from failures.
As of December 2014, Amazon Web Services operated an estimated 1.4 million servers across 28 availability zones. The global network of AWS Edge locations consists of 54 points of presence worldwide, including locations in the United States, Europe, Asia, Australia, and South America.
In 2014, AWS claimed its aim was to achieve 100% renewable energy usage in the future. In the United States, AWS's partnerships with renewable energy providers include Community Energy of Virginia, to support the US East region; Pattern Development, in January 2015, to construct and operate Amazon Wind Farm Fowler Ridge;  Iberdrola Renewables, LLC, in July 2015, to construct and operate Amazon Wind Farm US East; EDP Renewables North America, in November 2015, to construct and operate Amazon Wind Farm US Central; and Tesla Motors, to apply battery storage technology to address power needs in the US West (Northern California) region.
AWS also has "pop-up lofts" in different locations around the world. These market AWS to entrepreneurs and startups in different tech industries in a physical location. Visitors can work or relax inside the loft, or learn more about what they can do with AWS. In June 2014, AWS opened their first temporary pop-up loft in San Francisco. In May 2015 they expanded to New York City, and in September 2015 expanded to Berlin. AWS opened their fourth location, in Tel Aviv from March 1, 2016 to March 22, 2016. A pop-up loft was open in London from September 10 to October 29, 2015.
In 2017, AWS launched Amazon RE:Start in the United Kingdom to help young adults and military veterans retrain in technology-related skills. In partnership with the Prince's Trust and the Ministry of Defence (MoD), AWS will help to provide re-training opportunities for young people from disadvantaged backgrounds and former military personnel. AWS is working alongside a number of partner companies including Cloudreach, Sage Group, EDF Energy and Tesco Bank.
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