Amazon Girds for Cloud Battle with Microsoft

BALTIMORE—Stating that Amazon Web Services (AWS) has a solid footing in the infrastructure-as-a-service business, Werner Vogels, chief technology officer of Amazon.com, noted that new companies entering the cloud computing space will need to compete on the merits to gain credibility.

Speaking at the USENIX Large Installation System Administration (LISA) conference, Vogels listed the four primary things cloud services must provide: scalability, cost effectiveness, reliability and security.

Asked by eWEEK if he anticipated Microsoft trying to undercut AWS’ pricing with its Azure cloud services offering, Vogels said he had “no idea” what the software giant will do.

Microsoft’s Professional Developers Conference (PDC) is coming up on Nov. 17, where the company is expected to take the beta tag off of its Windows Azure cloud platform. Microsoft launched Azure in “beta” as a Community Technology Preview at its 2008 PDC. And the company later provided preliminary pricing guidelines that were slightly above Amazon’s, However, Amazon recently dropped pricing on some of its services. So a potential way for Microsoft to make a bigger splash into the market could be a pricing play.

During his prepared talk, Vogels said, “We believe competing on price is good for customers.”

In an interview with eWEEK following his keynote, Vogels  said, “I believe that low prices are important to our customers, which is why when we are able to achieve major cost saving we turn around and let our customers benefit from those savings.”

Yet, he noted that pricing will continue to be important to Amazon Web Services customers and that 10 years from now, no one will say “Oh, I love Amazon; I just wish they were a bit more expensive.”

However, when asked specifically if he thought Microsoft might try to undercut Amazon on price, he replied, “I don’t know whether they will try to undercut us on price. I hope that they compete on the issues I mentioned of scalability, reliability, cost effectiveness and security. Sure, cost-effectiveness is one of the four, so they could try a pricing play. But it’s harder for a technology company to come in and build this sort of thing. We have done it, and we have a track record.”

Vogels brought that point home to the audience made up primarily of system administrators here.

“I often introduce myself as the system administrator of a large book shop,” he said, "but that would be disrespectful here since many of your jobs are much more difficult than mine.”

Meanwhile, Vogels outlined AWS’ strategy of delivering infrastructure as a service and the forces that had to come together for that to happen, such as the advent of service-oriented architectures, virtualization, new distributed computing algorithms and more.

Moreover, for a system to be a true cloud or infrastructure as a service, the services need to be available on demand, you need to be able to release them when you no longer need them, and you ought to be able to pay only for what you use.

Vogels also admonished attendees to look at the various pricing models that different vendors are coming up with and to study the licensing models.

AWS enterprise customers include NASDAQ, ESPN, Autodesk, Eli Lily, eHarmony and Pfizer, among others. 

And in the end, Vogels reiterated his stance that there are several factors that are important when customers think about using the cloud: availability, scalability, security, performance and cost-effectiveness. He said Amazon has more than proven its mettle in each of these areas.