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Originally published November 12, 2014 at 12:05 PM | Page modified November 13, 2014 at 10:19 AM

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Amazon Web Services growing fast; more datacenters in works

The head of Amazon Web Services says a long list of businesses in every “imaginable segment” is using AWS “in a meaningful way.”

Seattle Times business reporter


LAS VEGAS — The executive who runs’s business selling computing services to companies over the Internet said Amazon plans to open at least a dozen massive datacenter operations around the globe to meet customer demand.

Amazon Web Services just opened its 11th massive datacenter, called a “region” in company parlance, in Germany. It also is negotiating to open a center in Ohio, one that Ohio state authorities say in a filing could cost Amazon $1.1 billion over three years.

With AWS sales growth topping 40 percent in the last year, customer interest is so strong that AWS will likely have a region in “every major country” over time, said Andy Jassy, who runs AWS.

“I would bet over time it’s going to be at least a couple dozen, and likely more,” Jassy said in an interview with The Seattle Times during re:Invent, AWS’ annual conference in Las Vegas.

Jassy, though, said it would be a mistake to believe that each region costs the same $1 billion Ohio authorities expect there.

He said that would be “wrong, by a lot.”

He would not disclose the amount Amazon does spend building regions. But over a period of a few years, the costs could climb as datacenters get more use, leading Amazon to expand them to build more capacity.

Costs have increasingly become an issue for Amazon, as shareholders have balked at the company’s thin margins and losses. Meanwhile, the company continues to pump money into businesses such as AWS while keeping prices low. Jassy noted that AWS has cut prices 46 times since it debuted nine years ago.

But Jassy said in the interview that he doesn’t expect changes in either the investment or pricing strategy.

“If you are going to pursue big reinventions of industries, you have to be willing to invest over a long period of time, and you also have to be comfortable with being misunderstood for long periods of time,” he said.

And while Jassy disclosed the rate of growth at AWS, he declined to disclose the unit’s annual sales. Some analysts expect it to top $5 billion this year. Jassy did say AWS now has more than 1 million customers.

AWS has been a pioneer of renting computing storage and services to businesses. Jassy pressed the point that so-called cloud computing is now the standard for business, listing company after company, big and small, using AWS.

“Every imaginable business segment is using AWS in a meaningful way,” Jassy said in his keynote. “Cloud has become the new normal. Companies of every size are deploying cloud applications by default.”

Though deeply geeky, the business is one of the fastest-growing units at Amazon, a company better known for its consumer offerings. AWS has become the leader in a business with such potential that it competes against corporate computing behemoths such as Microsoft and IBM, as well as Web giants such as Google.

The cost of creating the massive datacenters and the price of developing a broad variety of services that customers want are becoming a bigger barrier to entry for would-be competitors. Increasingly, only a handful of companies with vast resources will be able to challenge Amazon’s lead, Jassy said.

“I think there are only a few that are investing at a rate that gives them a chance to be one of those few,” Jassy said. “I don’t think it’s 10. I think it’s single digit.”

The Las Vegas conference, now in its third year, drew 13,500 attendees. It has become a place for Amazon to roll out new services, and Jassy launched several Wednesday.

Perhaps the most significant was Aurora, a database engine Amazon claims has the speed and availability of expensive commercial databases while costing a tenth of the leading commercial options.

The company also launched a handful of services to make deploying and managing code on its Web-based services easier and less expensive. And it rolled out new security and compliance options to encourage companies and government organizations to move to AWS.

Last year, Amazon won a prized $600 million contract to provide computing to the Central Intelligence Agency, beating out IBM. Amazon continues to use that deal as a proof point to convince companies concerned about the security of its Web-based offerings.

“A lot of our customers say to us, ‘If it’s secure enough for the CIA to use, then it’s probably secure enough for us,’ ” Jassy said.

Earlier Wednesday, Doug Wolfe, chief information officer of the CIA, told a group of government tech executives at the conference that the agency is now moving to add a classified version of the AWS Marketplace, which offers a raft of apps that run on AWS.

That will bring nearly 2,000 new services to the CIA’s computer users, the kinds of computer services those folks might use in a nonclassified world and want in their workplace.

“It’s going to take a few months to get this running,” Wolfe said. “Our goal is that we can bring that innovation over faster than we have in the past.”

Increasingly, Jassy said, customers are moving more and more of their computing operations to AWS.

Jassy used to trot out ­Netflix as the customer that ran its business on AWS. Wednesday, Intuit Chief Technical Officer Tayloe Stansbury said the company has cut costs and become so much more efficient with AWS that it plans to move all its applications there.

Publishing giant Condé Nast has moved its primary datacenter to AWS, Jassy said. News Corp is moving 75 percent of its workloads to AWS. And Major League Baseball’s Advance Media business is using AWS for its Statcast service, which provides pitch speeds, fielder reaction times and more, generating 17 petabytes of raw data a year.

Jay Greene: 206-464-2231 or Twitter @greene

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