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'Private cloud protects biz model of old IT players'

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CIOL Bureau
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hBANGALORE, INDIA: Andy Jassy, senior VP, Amazon Web Services (AWS) and Amazon Infrastructure, talks to CIOL about his thoughts on cloud adoption in India and what he thinks about private, public and hybrid cloud terminologies and competition. Excerpts:

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CIOL: Are you happy with the kind of adoption of cloud in India?

Andy Jassy: I am very happy with the way cloud adoption in India is going for AWS. It is already one of the largest countries in the world in terms of adoption. There are quite a few, very impressive and interesting enterprise and start-up use cases. NDTV has put five of its national stations over AWS and also run content management systems on top of AWS. Hungama runs 80 per cent of their applications on AWS and similarly does redBus.

Also Read: India showing strong inclination towards private cloud

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We have a large number of Indian customers and it is growing very rapidly. In terms of potential workload and applications, there are some who can be satisfied or served well with the 60 to 80 millisecond latency from Singapore to India. That group of applications is quite large.

In the United States, the latency from the East Coast to West Coast is about 80 milliseconds. And majority of our US customers use our East Coast Region and yet latency is about 80 milliseconds.

However, there are other workloads that won’t tolerate that latency and need lower latency than that or have regulatory reasons why they need to or want to keep data inside the country. It will be harder to get those workloads on our platforms until we have a presence here.

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CIOL: What is your take on the private, hybrid, and public cloud buzz?

Andy Jassy: There is a bit of confusion about it. We find all those terms such as private cloud, public clouds, hybrid clouds, infrastructure-as-a-service, platform-as-a-service, are kind of overloaded and confusing terms. Primarily because we never had a customer who came to us and say, 'I want an IaaS product, or can you give me a hybrid product?'.

What customers are looking for is a way to solve a problem and over time we are already starting to see this happen. Moreover, over time all of those lines that people think are so neat today are completely blurring.

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If you look at why cloud adoption is so hot, it has nothing to do with the term 'cloud', and has everything to do with the benefits that this platform provides:

First you can turn capital expense into a variable expense. You do not have to lay out capital upfront for servers and for data centres. You only pay for what you use, and that what you pay (the variable expense) is lower when compared to the companies who pay and do it on their own, because we have so much scale that we often pass on cost savings to our customers.

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Second, you get true elasticity at the company level which means that you do not have to guess how much capacity you need, as you have more demand you can seamlessly fill out with the services from AWS. 

Third, and if you don’t need any more of that capacity, you can just give it back to AWS. That’s the real elasticity up and down which is very different from what the old models have been for the last 30 years.

Fourth, time to market is less. It lets you move much more quickly, unlike before where you had to wait for six to 20 weeks for a new server. In the cloud, you can spin up hundreds and even thousands of instances or servers in minutes and so, that really changes your thinking about new things you can try.

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Fifth, it allows companies to make use of its engineers in business activities rather than in allotting additional resources.

Hardly, any of these benefits exist in a private cloud. In a private cloud there is heavy capital expense, and big upfront fixed fees and it is not pay-as-you-go. There isn’t real elasticity, as you may be still at the department level. And if you give it back to the company, the company still owns it and you have to manage it yourself with those engineers.

So you have to ask yourself why and who is pushing the private cloud. It is often the old-world IT players because private cloud protects the business or margin structure that they built over the last 30 years. I believe that 10 or 20 years from now, hardly any company is going to own a data centre, and those who do will have tiny footprint.

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That means, all compute will move to cloud. If so, cloud is going to be a very high-volume low-margin business, as against the old-world IT players that have operated over 70 to 80 per cent gross margin businesses, over the last 30 years.

It would be interesting to see if such companies are getting excited about that model. So I think the push to the private cloud is a sign that they are not excited about moving to that model. Even if they become excited about it, it would be very interesting to see how they will operate in that environment because you cannot flip a switch to become a good high-volume low-margin operator.

CIOL: How do you look at the competition aspect now that IBM, Microsoft and Google are there in the fray?

Andy: We spend very little time focusing on other companies. One of the things I remember, way back in 1997, when we were just a book seller, is that there were rampant rumours about Barnes & Nobles (the biggest book seller in the United States) going to launch their website. A lot of people thought that was the end of Amazon!

However Jeff Bezos, our CEO, said to the 200 people in the company that one shouldn’t go to sleep at night worrying about your competitors, but worrying about whether you are serving your customers well.

We are certainly aware of what other companies are doing and try to incorporate certain things into our business in order to improve. However, in the space that we are in - infrastructure and cloud computing - we just have a robust and evolved platforms and services than anybody else at this stage.

There will be a lot of other companies who want to be in the space; however, it is just too good a value proposition.i

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