In his second letter to shareholders as CEO, Amazon’s Andy Jassy has offered an insight into what the future looks like for its Amazon Web Services (AWS) arm as the world continues to shift digitally.
Jassy likens the recent economic difficulties to those of the 2008-2009 recession, and the 2001 period that preceded it. Each of those three times, the company has had to re-evaluate its various operations and subdivisions and there has been one consistent throughout: customer relationships.
Amazon clearly has its finances in mind, having grown from a pre-pandemic revenue of $245 billion to a 2022 figure of $434 billion, but Jassy believes that building meaningful and lasting relationships has been pivotal to its success.
Big changes for Amazon ahead?
Jassy explained AWS cloud customers can benefit from scalability and elasticity without having the expensive outlay and depreciating assets of on-prem IT. Uptake has continued to be healthy with customers focusing more on cost-optimizing rather than cost-cutting, to the point that the company’s sales teams are “spending much of their time” helping customers to weather the continuing storm.
Jassy explained: “While these short-term headwinds soften our growth rate, we like a lot of the fundamentals that we’re seeing in AWS. Our new customer pipeline is robust, as are our active migrations.”
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Much of the cloud computing division’s success can be attributed to the in-house silicon, such as Amazon’s Graviton CPU processors which are now in their third generation, the two generations of ‘Inferentia’ inference chips, and the new ‘Trainium’ training chip.
The recently announced EC2 Trn1n and Amazon EC2 Inf2 instances, which use homegrown chips, have entered general availability ahead of the company’s plans to make generative AI training with pre-existing foundations models (FMs) available to more businesses.
Likening the transition to cloud computing to the migration between physical store locations and online shopping, Jassy explains that the company now stands in a good position to be able to accommodate the growing number of businesses looking to make the change, with 90% of the market still using on-prem tech.
Another project that got a mention in the end-of-year letter was Kuiper, Amazon’s low-Earth orbit satellite system to rival Starlink and OneWeb, which it hopes to make commercially available in 2024 after the testing of two prototype satellites later this year.
Looking ahead, all of this, says Jassy, will build a “sustainable, long-lasting, growing company” that harnesses close customer relationships and drives profitability for the company. In other words, it seems that Amazon isn’t as concerned about short-term fluctuations as the 27,000 layoffs suggest.
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