Andy Jassy’s Rise to Amazon CEO Shows the Growing Power of the Cloud

The battle for the cloud takes place across industries – from video games to cars to space – and businesses large and small.

For Amazon, cloud computing is a booming and hugely lucrative business. Amazon Web Services, or AWS, generated just over 10% of Amazon’s total sales in the last quarter of last year, but generated more than half of the company’s operating profit over the period. AWS revenue grew 28% in those three months from a year earlier to $ 12.7 billion, and operating profit was $ 3.6 billion.

For executives, the cloud is increasingly becoming a stepping stone on the enterprise scale. Microsoft CEO Satya Nadella led the software giant’s cloud business before it rose to the top in 2014. International Business Machines Corp.

Last year, he turned to his cloud chief to appoint a new CEO to help jumpstart growth.

Mr Jassy’s appointment – he replaces Amazon founder Jeff Bezos as CEO in Q3 – is particularly notable because Mr Jassy takes over not only a tech company, but one of the world’s largest retailers. .

“This shows how important the cloud is to our economy,” said Rishi Jaluria, analyst for investment research firm DA Davidson & Co. “With Andy Jassy in charge of all of Amazon, it shows how the company wants to bring that DNA at the heart of AWS for all of Amazon. “

The breadth of tools now offered by Amazon and others through the cloud has exploded as businesses across industries collect more data about their products, customers and employees. Cloud providers are now providing applications to, for example, help manage and analyze this wealth of information, increasingly using artificial intelligence software to automate processes.

Investors are increasingly rewarding companies that have embraced cloud computing, and they have a darker view of those that are struggling to adapt.

Snowflake Inc.,

a company that offers tools to help businesses manage their data across multiple clouds went public last year in a successful public offering. Stocks, down from their December highs, have risen about 18% since their debut. Data analytics start-up Databricks Inc. recently raised $ 1 billion, giving the San Francisco-based company a valuation of $ 28 billion. Salesforce.com Inc.,

launched over 20 years ago as a cloud-based software company, has grown to become one of the largest providers of business tools in the United States and has used its growing fortunes to help fund deals , including an agreement late last year to purchase cloud-based workplace collaboration software provider Slack Technologies Inc.

Companies that have been slow to adopt the cloud are trying to catch up. Larry Ellison, Founder and CEO of Database Provider Oracle Corp.

, once dismissed cloud computing as a fad. In recent years, Oracle has stepped up its cloud computing efforts and freed up AWS staff. Mr Ellison now regularly claims the company’s cloud exploits on results calls and landed popular video conferencing company Zoom Video Communications last year. Inc.

as a cloud client to perfect Oracle credentials.

At the start of the pandemic, when U.S. businesses crouched down, multi-year cloud spending growth looked threatened. Salesforce slashed its outlook for the entire year because it offered some struggling customers a payment holiday. IBM withdrew its annual forecast in April.

But reality played out differently. The pandemic has overloaded the cloud as businesses rushed to adopt tools to help them cope with remote working and other challenges during the health crisis. Microsoft’s Azure cloud before the pandemic had experienced a slowdown in growth as it gained in scale. This has reversed in recent months. Azure sales grew 50% year over year in the December quarter, compared to 48% in the previous quarter.

“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping through all businesses and industries,” Nadella said last month.

Amazon is clearly the cloud leader in terms of sales, although companies differ in the way they calculate the revenue generated from these activities. AWS had a market share of around 34% at the end of last year, according to Synergy Research Group. Microsoft finished second with a 20% slice, but narrowed the gap, according to Synergy Research.

Amazon’s rise to the cloud has not been without challenges. In addition to increased competition, some retailers, such as Walmart Inc.

—You avoid AWS and team up with your rivals for the sake of giving Amazon more business and power.

The cloud is also increasingly a political minefield as it becomes more and more central to everyday life. Last month, Amazon was caught in the heavy question of what content to allow and what to deny on its platform. AWS kicked conservative social network Talk from its cloud, saying the customer failed to properly monitor its content and failed to remove content that violated Amazon’s terms of service. Speak is suing Amazon for action.

When a House panel released a report last year on antitrust concerns over large tech companies, it said AWS was providing key infrastructure for companies competing with Amazon. “This creates a potential for conflict of interest where cloud customers are forced to consider sponsoring a competitor, rather than selecting the best technology for their business,” the committee wrote. Amazon said it is not using AWS to profit from its retail branch.

Amazon also caught the attention of lawmakers when a former employee was arrested in 2019 for orchestrating the Capital One Financial hack Corp.

Write to Aaron Tilley at [email protected]