Amazon adventure
08.12.2010
To most people Amazon.com is the place they buy their books, movies and electronics. But to CTO and vice-president Dr Werner Vogels, Amazon.com is a technology that just happens to do retail. He spoke to John Kennedy.
Dr Werner Vogels is a giant of a man, yet while animated and talking about his favourite subject, he is nimble, energetic and can’t say enough about the cloud. “Our entire European region is managed out of Dublin and if you ask me, when it comes to the cloud, Dublin is a really important place to be.”
Dr Vogels says that once Amazon.com used to be about the book you would buy. “At its core Amazon.com is a technology company, we just happen to do retail.”
He explained that almost 10 years ago, towards the end of 2001, Amazon.com came to a particular scaling point and CEO and founder Jeff Bezos gave engineers a mandate that after a decade the company had come to the end of its existing architectural life.
“Target in the US asked us to build something for them,” he says. “While doing so we saw an opportunity to build a platform that was bigger than Amazon.com and that would allow us and customers to reach the economies of scale that they would need.”
The answer has been Amazon Web Services (AWS), a business unit that has the potential to grow larger than Amazon.com’s retail business and which is being used by fast-growth start-ups and Fortune 50 companies alike.
Journey into the cloud
Dutch native Dr Vogels is the only executive at Amazon.com apart from Jeff Bezos to speak publicly about the company. He joined it in 2004 as director of systems research and was named chief technology officer (CTO) just a year later. Prior to joining Amazon.com he was a research scientist at the Computer Science Department at Cornell University.
The journey towards cloud computing at Amazon.com has resulted in a platform that, as it grows, enables the company to offer businesses lower prices, he says. “We have built a platform at such a scale that it is larger than Amazon needs and instead of pocketing the money we save, we lower the prices. We have lowered our pricing six times and we’ll continue to do it as we get more bandwidth. What’s important to understand here is that what Amazon offers is infrastructure as a service.”
The rise and rise of cloud computing – where the CIOs of large Fortune 50 companies or the head of a two man software start-up can just rent and provision server resources on an on-demand basis – is in Dr Vogels’ opinion the biggest revolution in technology perhaps since the dawn of the internet.
“Everything in technology is being called cloud these days, especially if it breaks,” he deadpans.
But on Amazon’s own infrastructure the growth is irresistible. “We recently hit 125bn objects on our infrastructure. It’s a clear exponential trend; this stuff is going to explode. Our network is achieving 150,000 storage transactions per second.”
But like anything that’s new, despite all the positives being put out about cloud computing – or even the hype – the sceptics are often those who have the most to gain: the CIOs.
Top myths of cloud computing
“CIOs aren’t necessarily the most open-minded when it comes to change and disruption,” he continues. “The biggest buyers of software as a services (SaaS) are in fact the heads of business units, not CIOs. Most IT departments are actually blockers of innovation, but customers have started to take control and use these service by themselves.”
Dr Vogels believes the biggest obstacle to cloud computing is FUD (Fear, Uncertainty, Doubt) and actually this is a truism that haunts the technology industry despite the enduring march of technology. “An Amdahl engineer once built a better mainframe than the company produced and instead of benefiting from this breakthrough, Amdahl sent its sales force out to tell people not to buy it.”
“The irony in terms of cloud computing is that the cloud offers better service level agreements (SLAs) than traditional IT infrastructure.”
Vogels says frenetic business activity brought about by the rise and rise of the internet, social networking and mobile and TV apps means that new product development will be something that businesses will spend days or weeks on instead of months.
He cites German media giant Bild.de which decided to use cloud computing to explore new business models. “They wanted to combine their newspaper content opportunities with e-commerce opportunities and also bring in citizen journalism.
“They went to their internal IT department and asked how long it would take to build such a product and the answer was nine months. Not satisfied with this they went to the cloud and they were up and running in just four weeks.”
Vogels says that a clear lesson for web development post 2010 will be to launch web products and services with the minimum of functionality and then grow. “Don’t launch with all the bells and whistles. Launch with minimum functionality so that you don’t lock in resources. Most companies buy servers they think they’ll need and are stuck with them.”
Speed of change
The speed of change, he points out, can be best illustrated by the example of movie rental firm Netflix in the US. “They used to ship DVDs and then two years ago they realised the market was running out of steam. They realised a fundamental change was occurring and now everything has shifted to digital delivery.
“It’s a great service but they realised that to digitise each film they enable people to download, they would have had to re-encode that movie into five different formats. Can you imagine how hard this would have been with a library of 20,000 movies? This would have meant building multiple data centres with many different clouds.”
Instead by using Amazon’s AWS infrastructure they can provision new servers as they like, he explains.
Vogels says the US government is actually a major user of cloud services and departments like the US Department of Treasury see cloud services as fundamental to security. “Vivek Kundra, the first CIO of the US government said the cloud frees IT workers to focus on mission critical tasks and they are getting better security in the cloud.”
Another example Vogels cited was Zynga, the fast-growing two-year-old computer games firm that is already boasting revenues in excess of US$1bn. “The majority of the time people spend on Facebook is playing games. Zynga has more than 85 million active users. It is using 12,000 servers at Amazon. Why? They don’t want to be doing any heavy lifting, they just want to focus on building games and as a result they are making serious use of the cloud.”
Vogels says one of the things he hears a lot from CIOs is the fear that because Amazon.com is an e-commerce giant once Christmas comes around the company may take servers away. “That’s not the case because every Christmas is good for Amazon.com and it is a separate business in itself.”
He adds that eventually the balance sheet for Amazon’s cloud business will be bigger than the retail business itself, which is something to consider when you think Amazon.com just turned in a US$7.5bn third quarter.
Intellectual challenge
“Amazon Web Services has been a significant intellectual challenge for us because many of the things we are doing here haven’t been done by anyone else,” Vogels says. “We are in this for the long haul.”
For businesses to get true value from the cloud he stresses that resources need to be available in an on-demand fashion, because this is where firms will realise the best advantages of the cloud. “If you do it in an on-demand, pay-as-you-go fashion it not only lowers costs. Scaling IT infrastructure is not just about scaling up. That is easy. It is most important that you scale up along with business dimensions and scale down when you no longer need the resources. To me that is the entire point of cloud.
“There will be times businesses have exponential moments and will need to scale up but you won’t need 2,000 servers all the time. You need to be quick and responsive for that big moment.
“IT managers and CIOs will always have to deal with the perception of IT being a cost centre, but can reposition themselves to be an enabler of innovation offering resources when needed and when they’re no longer needed, say: ‘no problem’,” concludes Vogels.
This article is part of Cloud Computing, An Irish Director Report, a practical guide to the cloud for decisionmakers.