AWS CEO Jassy Says Cloud Could Outpace Amazon's E-commerce Business -- And Partners 'Absolutely' Agree

Amazon Web Services, Amazon's popular cloud business, could someday outpace the company's retail business, according to AWS CEO Andy Jassy.

Amazon has built a wildly popular consumer business based on its dominant e-commerce platform, and the Seattle-based company is continually jumping into new markets, such as grocery, delivery, and streaming video services. But the biggest driver of growth within Amazon right now is its 12-year-old cloud business, AWS, which has a projected $22 billion revenue run rate for 2018.

"I think it's possible, in the fullness of time, that we could be the biggest business within Amazon," cloud leader Jassy said in an interview earlier this month.

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Reliam LLC, a Los Angeles-based managed service provider and AWS consulting partner, has seen the growing demand for AWS services firsthand. Reliam's CEO, Simon Anderson, believes it's very possible that Amazon's cloud business could beat the company's foremost retail business, simply because of the shear amount of money spent on IT in the U.S. every year -- an estimated $1 trillion goes toward the purchase of IT services, hardware, cloud, and applications, he said.

"Could I see AWS going from $20 billion to $200 billion? Absolutely. Could it get there in five years? Absolutely," Anderson said.

Both Amazon's retail and cloud opportunities are "gargantuan," according to Paul Vallee, president, and CEO of Ottawa-based Pythian, a solution provider and AWS partner. However, the path to success and rapid growth will be easier for cloud than retail heading forward, he said.

That's because enterprises are going to need a great deal of processing power to run their AI applications and to train machine models, Vallee predicted.

"In my opinion, we’re at the beginning of a massive second wave of cloud investment that is centered around data and machine learning – it's clearly laid out what the [cloud providers] need to offer," Vallee said. "I think more than 90 percent of the world's eventual investment in cloud is yet to come. I don't think it's as easy to say that 90 percent of Amazon's retail growth is yet to come."

Jassy said "inertia" will be the biggest constraint to cloud growth. AWS is currently growing its revenue by 49 percent year-over-year, but there are still many enterprises that are just getting started in their move to the cloud, he said.

"We are still in the early stages of enterprise and public-sector adoption in the U.S. [Countries] outside of the U.S. is still about 12-36 months behind, depending on the industry or country, so that means that the vast majority of infrastructure still lives on premises," Jassy said.

Logicworks, an AWS Premier Partner, is a 25-year old managed services provider that placed all its bets on AWS five years ago when the New York City-based provider became an AWS-exclusive cloud MSP. Logicworks today is busy migrating, managing and automating workloads on Amazon infrastructure for its enterprise clients. If AWS became the largest business within Amazon, it would be an impressive feat given the success of its other businesses, said Logicworks' CEO Ken Ziegler. Amazon.com reported revenue of $177.87 billion for its e-commerce and service sales in 2017.

But at the same time, Amazon's cloud business is only picking up steam and is poised to gain more customers as more businesses move to the cloud.

’In terms of growth rate, AWS has lots of runway ahead based on the acceleration we are seeing in terms of mass migrations to the cloud," Ziegler said.

AWS isn't just disrupting the IT space; the company is disrupting the way companies do business, and that applies to channel partners, too, Reliam's Anderson said.

"AWS consistently says to us as a partner; 'We encourage you to optimize and rightsize our shared customer's usage and services.' Try to think of a tech company even a few years ago that tells their partners to help customers spend less on its services -- its unheard of," he said.

But it's a genius strategy, Anderson said. By being more efficient and doing more with less, usage and revenue per customer typically will increase as businesses are freed up to adopt more cloud services. "AWS really drives that from the top or the organization down, and it's very impressive."