After seven years, Netflix reports that it has finally completed its migration to Amazon Web Services. In other words, every non-AWS data center that was previously used by the company has been shut down as of January 2016 and migrated to the Amazon cloud. In a blog post by Yury Izrailevsky, Stevan Vlaovic and Ruslan Meshenberg, Netflix reports that transitioning to the cloud has brought with it a multitude of benefits such as the ability to accommodate explosive growth, cost savings that “ended up being a fraction of those in the data center,” enhanced service availability that enabled it to reach its goal of four nines of service uptime and greater operational agility. Migrating to the cloud, for example, has enabled Netflix to add “thousands of virtual servers and petabytes of storage within minutes” while accommodating growth in monthly streamlining hours in excess of a factor of 1000 between 2007 and 2015 and an eightfold rise in its population of members. The consummation of the migration of Netflix to Amazon represents a true milestone in the evolution of cloud computing given that the largest streaming video service in the world has chosen to partner with one public cloud vendor for all of its cloud computing needs. That Netflix chose Amazon represents a stunning affirmation of Amazon’s ability to scale and the richness of its features. The question now is whether Netflix will complement its partnership with Amazon with another major cloud vendor to reduce the vendor dependency risk associated with hosting its services on one vendor while concurrently recognizing the ascendancy of other players in the public cloud space.
Amazon Web Services
On Thursday, Amazon.com announced that Amazon Web Services generated $2.4B in revenue during Q4 of 2015, or year over year revenue growth of 69%. The Q4 year over year growth rate declined from Q3 and Q2 of 2015, which recorded year over year growth rates of 78% and 82% respectively. Nevertheless, Amazon Web Services brought in a whopping $7.88B for the entirety of 2015, meaning that it is now fundamentally an $8B business. Operating income for Q4 was $687M and approximately $1.9B for the entire year. The $687M in operating income for Q4 2015 constitutes an increase in comparison to $521M in Q3 and $240M for Q4 of 2014. Amazon’s announcement of $2.4B in quarterly revenue represents the highest quarterly revenue figure for Amazon Web Services in its history, exceeding the $2.08B recorded in Q3 of 2014. Despite impressive financials for Amazon Web Services, shares of Amazon tumbled on Thursday after news that it had missed its earnings estimates and continues to operate on razor thin margins. Regardless, Amazon Web Services remains the fastest growing business unit within Amazon.com.
Amazon offered a stunning Black Friday promotion for its Amazon Cloud Drive that gives users a year of unlimited cloud storage for $5. The promotional price of $5 represents a 92% discount on the regular price of $59.99/year and illustrates the intensity of Amazon’s interest in grabbing a space within the cloud storage space amongst the likes of Dropbox Pro, Apple’s iCloud, Microsoft OneDrive and Google Drive. Amazon’s pricing trumps Microsoft, which had offered Office 365 subscribers unlimited storage on its Microsoft OneDrive platform until an internal investigation revealed a subset of users were using storage in excess of 75 TB per user, causing Microsoft to subsequently curtail storage for Office 365 subscribers to 1 TB per user. Bear in mind that Amazon’s promotional price of $5 is almost certain to increase in subsequent years, upon renewal. Nevertheless, the plan allows uploads of an unlimited number of files, including full resolution photos. More importantly, from Amazon’s standpoint, the Cloud Drive promotion continues the consumerization of Amazon’s cloud platform by luring more and more users to its platform, thereby creating the potential for consumer spillage to other Amazon products and services. Rest assured that competition in the cloud storage price is likely to only continue to intensify as Box and Dropbox go head to head with cloud behemoths such as Amazon and Microsoft. Regardless, the real winners are consumers who stand to benefit not only from downward trajectories in price, but also from enhanced functionality for file uploads, storage and retrieval that will likely accompany increased competition within the cloud storage space.
On October 8, Amazon Web Services announced the release of AWS IoT, its platform for Internet of Things data, at its AWS re:Invent conference in Las Vegas. The AWS IoT platform facilitates the connection of devices such as sensors, automobiles and appliances to enable data acquisition of internet of things data, the application of rules to ingested data and the ability to remain connected to devices, even when they are offline. Devices connect to AWS IoT by means of a Device Gateway that leverages the HTTP and Message Queue Telemetry Transport protocol for sensors and mobile devices. Upon ingestion, the AWS IoT rules engine allows customers to create rules to route and filter data and send alerts and notifications to connected devices and related applications. The AWS IoT rules engine empowers customers to route data to the appropriate AWS product (Redshift, Kinesis, S3, Lambda, etc.) for long-term storage and analytics. Devices can stay connected to AWS IoT even when they are offline by means of the platform’s ability to create a virtual, “shadow” version of the device that enables other devices to interact with the latest available data for that device. The AWS IoT platform builds upon Amazon’s acquisition of 2lemetry in March 2015 and represents a much awaited addition to the cloud behemoth’s portfolio, particularly given the proliferation of competing products from Microsoft, Pivotal and ParStream. Expect AWS to integrate advanced analytics into its IoT platform that enhance the insights currently available via its rules engine in upcoming months.
Amazon Web Services recently elaborated on the DynamoDB service disruption that affected the US-East Region last Sunday, September 20. The root cause of the problem was associated with storage servers that failed to retrieve metadata that allow the storage servers to hold table data. As explained in a post-mortem analysis of the disruption, DynamoDB tables are separated into partitions. Partitions, in turn, are spread along multiple servers. The assignment of groups of partitions to a server is known as a membership, and membership is managed by DynamoDB’s metadata service. Storage servers hold table data within a partition and need to periodically confirm they have the right membership. On Sunday at 2:19 AM PDT, a service disruption affected DynamoDB storage servers whereby some storage servers were unable to retrieve membership data. One of the reasons for the inability of storage servers to retrieve membership data involved rapid customer adoption of Global Secondary Indexes, which allows customers to have more than one key, and correspondingly results in an increase in the volume of membership data stored on a storage server. The rapid adoption of Global Secondary Indexes imposed additional stress on storage server retrieval of membership data to a point where select storage servers were unable to retrieve membership data. Amazon responded by adding capacity to storage servers, but it wasn’t until Amazon paused requests to the metadata service that it was finally able to add capacity in a way that restored the ability of storage servers to retrieve membership data. As a result of the disruption, Amazon is increasing the capacity of its metadata service for DynamoDB. In addition, Amazon plans to implement more stringent monitoring of DynamoDB performance in conjunction with an upgraded metadata infrastructure whereby multiple instances of the metadata service variously service subsets of the entire fleet of servers.
Amazon recently released Cloud Drive for iOS, a mobile app for the iOS platform that serves as the counterpart to the Cloud Drive app for Android that was released in June. Previously, iOS users had access to an Amazon app that enabled access to Amazon Photos, which were automatically uploaded to the Amazon Cloud. With the release of Cloud Drive for IOS, however, iOS users can read files within the Amazon Cloud Drive, including the preview of spreadsheets and presentations. The app allows users to share files via a link or email attachment and post the file to social media applications. Importantly, users cannot upload files to the Amazon Cloud using either the Android or iOS app, which renders the app bereft of crucial functionality in comparison to competing mobile apps from the likes of Dropbox and Google Drive. The lack of Cloud Drive app functionality is surprising for Amazon, which historically has differentiated itself by way of the richness of the pre-configured features within its cloud-based product line. As such, the app illustrates the immaturity of Cloud Drive within the larger portfolio of cloud-based storage platforms and raises questions about the depth of Amazon’s commitment to Cloud Drive, even though the industry can reasonably can expect significant enhancements to both the Android and Apple mobile apps in forthcoming months.
Amazon Web Services and Microsoft Azure took the two leadership positions in its latest Magic Quadrant report for Magic Quadrant for Cloud Infrastructure as a Service, Worldwide. Amazon is the clear market leader and, according to Gartner, claims more than 10 times the computing capacity of the other 14 vendors represented in its Magic Quadrant report. Other vendors represented in the report include Google, Rackspace, IBM SoftLayer and VMware vCloud Air. Gartner estimates that the IaaS space will experience growth of 33% in 2015 and become a $16.5B market globally with an annual growth rate of 29.1% through 2019. In a press release about the report, Gartner noted that “the market for cloud infrastructure as a service (IaaS) is in a state of upheaval, as many service providers are shifting their strategies after failing to gain enough market traction.” The report’s finding that Amazon Web Services and Microsoft Azure represent the two market leaders means that the rest of the space will need to significantly differentiate their product offerings to flourish in an increasingly competitive space.