AWS CEO: 'Companies not moving to cloud are fighting gravity'

Andy Jassy opens up on why companies might be hesitant to go all-in on cloud, takes pot shot at competitors

Businesses who are refusing to undergo a cloud migration are fighting a losing battle, according to AWS' chief exec.

In a fireside chat at the vendor's online Summit event, Andy Jassy said he understood why some organisations are wary of a cloud move, but that they will be at a competitive disadvantage if they don't.

"There is still a segment of companies trying to fight gravity and they argue that they can still do the infrastructure less expensively than can be done in the cloud or that they have enough services to allow their organisation to move as quickly as people can in the cloud," he told Matt Garman, AWS's VP of worldwide sales and marketing, during the chat.

"We've done many thousands of these comparisons over the years and I don't think I've yet seen a company that can move at the cost structure and the pace of changing their customer experience that they can in AWS and in the cloud.

"I think there are a lot of reasons as to why people are resistant; I think oftentimes they are proud of the infrastructure they have already built, sometimes they take the notion of ‘if it's not broke why fix it?', other times people don't know what it means for their own job and scope. It's hard sometimes to make that change."

He detailed Amazon's own resistance to change: in its early days as an online bookseller it had to decide to change from its original "owned-inventory" model - buying books from publishers and selling them at low-margins to customers - to the marketplace model which was becoming popular due to the emergence of sites such as eBay.

"We built the whole company where we were wholly invested in this owned-inventory model and we weren't convinced that third parties could take care of customers the way we could," he elaborated.

"In weeks-long discussions, we realised that it would provide customers with better pricing and selection and that you can not want something to happen all you want, but you can't fight gravity. If there's something that's really good for customers and businesses it's going to move that way whether you want it to or not."

Those customers considered "toe-dippers" also need to make a decision on whether they are going all-in on the cloud because the longer they procrastinate on the matter, the more advantage they give their competition, he claimed.

"Toe-dippers know that they should move to the cloud and understand conceptually why they're getting pressure from their board and a lot of the time they dip their toe in the water to appease the person pressuring them or just to see, but they end up never really committing and not making much progress for a long period of time," he explained.

"The problem with that is that while your competitors have gone all the way in and moving much more quickly and cost-effectively, you're still in this experimental phase where you haven't transformed your company and, a lot of times, until you make the commitment to move you are operating with two diff infrastructures and you have this financial bubble too."

Jassy also took the opportunity to throw some digs at competitors, explaining how Amazon's origins as a retailer means it has a better understanding and running a high-volume, low-margin cloud operation.

"People still don't really understand that well how incredibly large a logistics and operational challenge the cloud is," he said.

"Because we grew up as a retail business - which is an extremely low margin business - we have a lot of that DNA to think about these high-volume, low-margin businesses. I think most of the other providers haven't grown up that way and so they don't have that mindset or experience or scale yet.

"In the Covid crisis, the operational performance and availability in AWS is many times higher than the next biggest provider. You see it also in the cost structure; there's a reason why we're the only ones that really break out our financials cleanly in the cloud computing space. It's really hard to run these high- volume, low-margin businesses at scale and operate in the right way."