Partnership between Amazon Web Service (AWS) and VMware offers enterprise inroads that will maintain profitable growth, says Meaghan McGrath, at analyst at TBR.
Though a small driver of Amazon’s top line, AWS continues to establish its criticality to broader Amazon profitability.
Ahead of its annual conference, which promises to boast numerous product launches and strategy updates, Amazon Web Services (AWS) continued to deliver consistent revenue growth, reaching over $3.2 billion in Q3 2016 revenue, just shy of 10 percent of corporate revenues. With 4Q16 as the substantially larger quarter for Amazon’s retail business, AWS will not reach that 10 percent milestone until 2017.
The business segment does, however continue to draw in enough operating profit to more-than-counter International declines, confirming this unit is a strategic part of Amazon’s long-term profitability and sustainability. AWS’ global expansion efforts, which in Q3 2016 included the opening of its Ohio region and announcement of a region to be developed in Paris, France, will coincide with opportunities in Amazon’s other business units, but will also follow emerging technology consumers and enterprise customer needs for global infrastructure availability.
AWS continues to value and expand its breadth of capabilities over in-house high-touch services.
As AWS’ competition, specifically Google Cloud, reduce prices and stress high-touch enterprise services, AWS continues to prioritize feature innovation and supplements partner services with online customer self-service portals. Though AWS did complete its 52nd price reduction in Q3 2016, broad functionality and pace of innovation are larger factors for customer adoption, and therefore are a larger AWS priority.
The company is again on pace to release more services and features in the current year than years past, and is also investing in strengthening its data center presence with the opening of Ohio in Q3 2016 and four more pending region additions. Though the company does offer “Enterprise Support” to review application architectures and ensure rapid responses for customers running large, mission-critical workloads on AWS, high-touch consulting and systems integration efforts are still left to its professional services partners. This ecosystem of support continues to be augmented by self-service education resources and frameworks of best practices, including the Q3 2016 launch of AWS Answers, which provides customers with indexed answers to common questions
Partnering with VMware eases enterprise adoption of AWS as part of IT hybridization
The recently announced partnership between AWS and VMware will allow customers to run and manage VMware workloads on AWS’s cloud infrastructures in addition to on-premises. VMware Cloud on AWS, currently in technology preview, will open opportunities for AWS to penetrate VMware’s enterprise customer base, and allow VMware to utilize AWS’ leadership in public cloud infrastructure to gain visibility and enable its “Any Cloud” strategy.
While the ultimate objective of this partnership will be to co-deploy a hybrid cloud solution using each company’s core strengths and have a complementary primary partner relationship spanning public and private deployments, AWS is positioned to benefit in the near term from existing VMware customers pivoting from their existing isolated environments to a hybrid IT strategy with AWS public cloud absorbing a portion of their existing workloads.
