It was bound to happen. It happened. AWS Storage is the Number 1 Storage Company.
The tell tale signs were there when Silicon Angle reported that AWS Storage revenue was around USD$6.5-7.0 billion last year and will reach USD$10 billion at the end of 2021. That news was just a month ago. Last week, IT Brand Pulse went a step further declaring AWS Storage the Number 1 in terms of revenue. Both have the numbers to back it up.
How did it become that way? How did AWS Storage became numero uno?
I became interested in the Flywheel concept some years back. It was conceived in Jim Collins’ book, “Good to Great” almost 20 years ago, and since then, Amazon.com has become the real life enactment of the Flywheel concept.
Every turn of the flywheel requires the same amount of effort although in the beginning, the noticeable effect is minuscule. But as every turn gains momentum, the returns of each turn scales greater and greater to the fixed efforts of operating a single turn.
This is the flywheel concept used by Amazon (AWS came later). With their unrelenting focus on delighting the customers, they reduced the costs of the items purchased by the customer, sped up the delivery with high standards, added more choices and heightened the customers’ experience. The satisfied customer would become a return and loyal advocate to purchase more, which increased Amazon sales, and reapplied back to the flywheel cycles to improve the customer experience, and bring in more returning sales, and new customers. The cycle of the flywheel goes round and round, and with each cycle Amazon increases operational efficiency, add more product choices, reduces costs, improves the experience further. And with each new turn of the flywheel, Amazon became better and better.
When their flywheel turned faster and faster, with pretty much a fixed amount of efforts, they invited third party sellers. New, previously not available products were added to what Amazon offered, and the 3rd party sellers gained a much bigger market. The operational efficiencies and the top-notch customer services were extended to these 3rd party, and both sides have a win-win. This was the beginning of the Fulfilment by Amazon (FBA) initiative, and Amazon became wildly successful.
Cannabalized our storage pie? No, the pie got waaaay bigger!
AWS took the same flywheel page from its parent Amazon.com, and applied it to their cloud computing business. AWS S3, the first cloud service, was launched in March 2006. Next, on the storage front, came their Elastic Block Storage (EBS). Over the next decade and a half, in no particular order, Glacier, Elastic File System (EFS), Snowball, Storage Gateway, FSx for Lustre, and many more were added to their storage stable.
Other traditional storage vendors began flocking to the cloud and AWS welcomed them with open arms, just like the FBA initiative mentioned earlier. AWS went ahead to partnered with some of them, even though they were direct competitors to AWS’s own storage offerings.
- Hybrid cloud is on the rise. Hybrid Cloud with AWS
As more enterprises and start-ups, with their cloud first mentality adopt AWS cloud services, AWS cloud computing became the gold standard for consumption-based IT-as-a-service. In the latest IDC Worldwide Cloud IT Infrastructure Market Forecast Deployment 2021 (chart below), IT infrastructure are becoming more and more cloud native.
This made the storage piece of AWS even bigger, even with its competitors side by side. They reduce the cost of their storage offering, which meant more storage capacity consumption, created more innovative ways to improve the overall storage delivery experience, made AWS storage absolutely vital to the customers, and customers come back for more. Oh, how the flywheel turns!
“If you build it, they will come”. The words may sound cliche, and that is exactly what is happening in the AWS Storage universe. That was how they became Number One!
The deity at the altar
It is obvious that the AWS storage revenue gap will grow wider and wider to the traditional storage vendors. Pretty soon, Microsoft® Azure Storage will catch up and overtake some of them too.
The economies of scale of the AWS flywheel is fueled by many factors described here. Even competing storage services are fueling the flywheel to become bigger, badder and better. AWS has become that deity at the IT altar. And AWS Storage has come to roost at the altar too.