Original URL: https://www.theregister.co.uk/2014/07/14/aws_versus_microsoft_enterprise/

Blighty's Amazon Cloud Lord: It's a battle of men vs boys, and I ain't no boy

I'm going to do a Microsoft on Microsoft. And SAP and the rest of them, too

By Gavin Clarke

Posted in The Channel, 14th July 2014 09:02 GMT

Apple and Google haven't won the cloud yet, according to one particularly chest-thumping interview with Microsoft's chief executive Satya Nadella this week. But who has?

Is it ... Amazon, perhaps? We talked to Amazon's top UK & Ireland cloud kingpin to get an insight.

So here's the background to the battle.

First, there's Microsoft. Microsoft's a consumer tech company, no question. It sells Windows on PCs, it sells Xbox and now - in very small numbers - Windows Phones and tablets.

What Microsoft isn't, though, is just a consumer tech company. Which is Microsoft's real problem.

Amazon, which is a consumer company, is coming into the enterprise owned by Microsoft and offering not just hosted cloud compute and storage against Windows, but more and more new services in the apps space on top of that.

Disaster recovery and backup, content delivery networks, remote desktop and - now - document sharing with Zocalo.

On paper, the real losers to Zocalo are the pure plays like DropBox and Box.com, who offer simple file sharing.

But there's trouble, too, for Microsoft and its cloudy Office 365 and SkyDrive.

Without question, Amazon Web Services (AWS) has been the Bezos e-tailer's biggest success, thanks to its outsourcing of compute and storage at industry-beating prices.

Those other services? Amazon doesn't even say how much it makes from AWS but it has customers using the additional features.

Not that it's gone according to plan, as some of the new stuff is pretty rough - remote desktop is no substitute for something as smooth as Cirix XenDesktop or XenApp.

But the intent is there, and you need look no further than the example of Microsoft for a company that comes from behind, rapidly improving while challenging on price, to kill incumbents.

Microsoft likes to portray itself as an enterprise blue blood, with years of experience.

Does the fact that AWS comes from Amazon, famed for selling books and making Kindle readers, mean it has baggage that needs to be addressed in corporate IT circles?

Yes, and no.

AWS UK and Ireland director Iain Gavin told The Reg during a recent interview that this might have been the case about five years back but that's not true now.

"Five years ago people were like: "Amazon? Really? Don't you do online retail? I think we've just built credibility with people."

"We don't have a 30-year history, we've been going since 2006. It's a positive, because people are inquisitive. We have created an incredible amount of credibility in a short time," Gavin says. "We are very focused on delivery and execution for the customer."

And yet, the consumer label sort of lingers. Gavin relates the experience of big names who've attended AWS enterprise summits in September 2013 and April this year and seen users like Shell, BP and Shop Direct presenting.

Customers are running all kinds of enterprise workloads on AWS, including SAP ERP, internal apps, development and testing, and high-performance workloads in finance and specific jobs such as Monte Carlo testing - jobs with high peak loads.

"The feedback we get from customers is I thought I was the only one doing it," Gavin said.

"I get a lot of emails from people that say it was really nice because it gave me the confidence to go back to the business and say: 'We absolutely should be doing this' or 'We are two to three years behind the curve.'"

It certainly sounds as though there's still a consumer company perception issue out there.

Rather, Gavin reckons, Amazon's experience in building a purely web-based compute business is paying off as Amazon has acquired a significant lead over enterprise companies of more than 30-years experience such as Microsoft - and those like SAP and Oracle who are now building out their own cloud platforms to try and steal business from Amazon.

Significantly, SAP in May announced the SAP Business Suite on Hanna, a hosted version of its applications priced on a subscription license.

Until now, AWS had been SAP's preferred hosted partner - providing certified versions of its ERP on AWS, meaning it was supported by the German software giant.

Gavin is predictably sanguine about the number of enterprise tanks rolling up on to the AWS lawn - and flying enterprise brand flags from their whip antennas.

"Brand is not going to differentiate you when you operate something," Gavin counters.

"There's a different mentality to building a software product and putting it on CD and downloading it to running something - running something is completely different to building something and we've learned a huge amount over eight years of running things at scale ... that separates the men from the boys."

Gavin points to the existence of 40 UK AWS account teams to hold customers' hands, inside account teams, solutions architects, training and certification programs.

"We provide everything Microsoft provides, we just don't talk about it," Gavin said of AWS support.

Ah, but there have been outages. And they hurt - creating bad headlines and damaging customer relations as those who bet their business on the cloud can no longer do business.

Gavin called these "challenging". He reckons Amazon hadn't realized AWS customers had not followed the company's best practices and many had built architectures that didn't include zonal routing.

Amazon has improved its architecture and best practices since then, he says, while one of the company's top engineers helped the transformer maker re-design the transformer make that had been used by a local power supplier and that infamously fried itself in Dublin in April 2011. Customers in a part of the EU West region of Amazon's cloud lost EC2, Elastic Block Store and Amazon's Relational Database Service for around three hours as a result of the transformer going under.

Doing a Microsoft- the price bounce

If AWS is "doing a Microsoft" and improving the technology then that brings us onto the other part of the equation - price. Microsoft scooped up customers in the early days in part thanks to the fact what it sold wasn't just easier to use but cheaper than the software from rivals in the PC, server and tools markets during the 1980s and 1990s.

Amazon has done nothing but cut the price of AWS - both proactively and with the onset of competition. To March this year AWS cut its prices 44 times since 2008.

The enterprise is a cynical and hard bitten place, though, and enterprise IT suppliers typically put their prices up once they've got you.

Microsoft has been ratcheting up the pricing on Windows Server - bumping up the datacenter edition of Windows Server 2012 by 28 per cent a year ago. To get Microsoft's server cloud licensing you must license all Windows Servers no matter how old - not just the most recent.

Microsoft customers that The Reg speaks to tell us they feel Microsoft is deliberately cranking up its prices to make them throw in the towel and jump to its cloud-based services.

How long before AWS starts turning the dial on price?

Never, according to Gavin, as - according to him - customers can "easily" leave AWS if they think they are paying too much. "When you look at our model, you have no notice to give to us, if we did that [price rise] customers would walk," Gavin said.

They just need a huge hard drive to take their data and/or a massive bandwidth connection - possibly the biggest two limiting factors on a customer actually upping sticks, and creating tremendous inertia.

Still, Gavin presses the point:

"There's nothing to stop them [going] - and people do take stuff out. We don't get churn but we do get people saying we want to take something out. We say fine, you don't have to call us."


Sure, let's debate who has "won" the consumer. It's about as meaningful as trying to figure out each year has the "most" valuable consumer brand name. It's the kind of debate that only gets marketing types excited.

But the enterprise? There's a customer base with solid success metrics; that metric is money as it's these customers who really pay the bills and who stick around for years - they don't bugger off after the next phone or tablet. It's the battle for these customers that's the real story, and it's a story where a company with a consumer past and present is pushing hard to loosen the grip of incumbents with a long history in the field. ®