Constant reinvention is the key to building a long-term, sustainable business, and Organisations should be reinventing while they’re healthy and developing products and services that solve customer problems, not for their coolness factor, according to Amazon Web Services CEO Andy Jassy.
“You want to be reinventing all the time,” Jassy said in his keynote address for the start of the AWS re:Invent 2020 conference today. “Some of it is building the right reinvention culture, and some of it is knowing what technology is available to you and jumping on it to make that reinvention happen.”
Livestreaming from Seattle, Jassy took the stage to open the ninth annual AWS partner and customer conference – the first to be held virtually – to share his cloud computing insights and how AWS is reinventing cloud technologies.
A big takeaway from Jassy’s keynote address is that digital transformation is mostly about leadership, not about technology, according to Mike Kavis, chief cloud architect for Deloitte Consulting.
“Jassy pounded home the need to address culture, focus on customers, reduce complexity and the importance of speed,” Kavis said.
Jassy also defended AWS’ slowing growth rate compared to other cloud providers, noting that year-over-year growth only matters as it relates to a company’s base revenue. AWS posted revenue of US$11.6 billion for the latest quarter that ended Sept. 30 – up 29 percent year over year for a US$46.4 billion annual revenue run rate. That growth rate mirrored AWS’ results from the previous quarter, when it dropped below 30 percent for the first time since parent company Amazon started breaking out its cloud financials in April of 2015.
“You can have a higher year-over-year growth rate but be growing at a much lower absolute rate if you have a much lower base of revenue,” Jassy said. “To grow to a US$46 billion dollar revenue run rate with 29 percent year-over-year growth meant we had to grow an incremental US$10 billion in the last 12 months to get there. That is much larger than you’ll see elsewhere in the cloud”
While it took AWS just more than 10 years to grow to a US$10 billion business, it took only 23 months to then grow to US$20 billion in revenue, 13 months to move to US$30 billion and just 12 months to get to US$40 billion, according to Jassy.
“So the rate of growth at AWS continues to accelerate,” he said.
Racism in America
Jassy started his presentation by speaking about the killings this year of three African-Americans that sparked protests and calls for police reform by the Black Lives Matter movement and others: Ahmaud Arbery, an unarmed 25-year-old black man allegedly fatally shot by a white assailant while jogging in Georgia; Breonna Taylor, a 26-year-old allegedly fatally shot by police in her Louisville, Ky., apartment in March; and George Floyd, a 46-year-old who died while in police custody in Minneapolis in May.
“If you live in the United States, it’s also pretty hard to not be struck by the murders of Ahmaud Arbery and Breonna Taylor and George Floyd and realize the sobering thought that we have so far to go in this country in how we treat black people,” Jassy said. “The reality is, for the last several hundred years, the way we treated black people in this country is disgraceful and something that has to change. We’re working on it at Amazon. I know a lot of companies are, but I think the important thing for us all to realize is that this does not get solved in a few months. It can’t be something that we work on for a few months and then turn our attention elsewhere. It’s going to take several years of us working together, but we need to do it.”
The Coronavirus effect
Jassy pointed to the growth of the cloud industry during the coronavirus pandemic, which forced companies to shut down their offices and rely on remote workforces and forced online retailers and television, movie and video streaming companies to ramp up their cloud usage to support customer surges.
“I think when you look back on the history of the cloud, it will turn out that the pandemic accelerated cloud adoption by several years,” Jassy said.
“In the short term -- in the first nine months or 10 months of this thing -- virtually every company in the world, including Amazon, has tried to save money any way that they can,” Jassy said. “But what we’ve seen -- and this happens a lot of times when you have a period of discontinuity like a pandemic -- is that companies take a step back, and they rethink what they’re doing and what they want to stop doing. And one of the things that we’ve seen is that enterprises that we’ve been talking with for many years about moving to the cloud -- where there’s a lot of discussion and dipping the toes in the water, but not real movement -- so many of those enterprises have gone from talking to having a real plan. And that, I think, is going to be one of the biggest changes you see.”
Companies must be willing and able to reinvent themselves – often multiple times over -- to build businesses that sustain themselves for a long period of time, according to Jassy.
“In the last nine months, I’ve thought a lot about reinvention and what it takes to do reinvention well,” he said. “Typically, what you see is the desperate kind of reinvention: You see companies that are on the verge of falling apart or going bankrupt deciding they have to reinvent themselves. And when you wait to that point, it’s a crapshoot whether you’re going to be successful or not.”
It’s a little bit like borrowing money, according to Jassy. Organisations don’t want to have to borrow money when their business is in bad shape, because they may not get the rates they want or get the money at all, he said.
“You want to be reinventing when you’re healthy,” he said. “You want to be reinventing all the time. Some of it is building the right reinvention culture, and some of it is knowing what technology is available to you and jumping on it to make that reinvention happen.”
Organisations first need the leadership will to invent and reinvent, according to Jassy.
“If you’re going to be a leader that’s going to reinvent, you have got to be maniacal and relentless and tenacious about getting to the truth,” he said. “You have to know what competitors are doing in your space. You have to know what your customers think about your product, and where you sit, relatively speaking. You have to know what’s working and what’s not working. And you will always have a lot of people inside the company who will try and obfuscate that data from you. Sometimes they think they’re doing you a favor, and sometimes it’s for self-preservation reasons. You have to challenge people -- often people who know a lot more about a subject than you do. But you’ve got to get to the truth. And then when you realize that there’s something you have to reinvent and change, you have to have the courage to pick the company up and force them to change and move.”
Part of that is sometimes acknowledging that you can’t fight gravity, according to Jassy.
“If you step back and have conviction that something is going to change because it’s a better experience for customers, it is going to change -- whether you want it to or not, whether it’s convenient for you or not,” he said. “If you look at what…(Netflix cofounder and co-CEO) Reed Hastings and Netflix did several years ago where they cannibalized their own DVD rental business because they saw where it was headed with streaming, I think that turned out to be a pretty good decision for them. You’re much better off cannibalizing yourself than having someone do it to you and chasing it.”
A Microsoft dig
Jassy took a swipe at rival Microsoft, whose Azure cloud division is a distant runner-up to the dominant AWS, but is narrowing the gap. Microsoft’s Redmond, Wash., headquarters is across Lake Washington from Seattle-based AWS.
“You’ve got builders who are curious about learning, who are excited about leaning forward and inventing and reinventing their customer experience,” Jassy said. “You want builders and talent that’s hungry to invent, but you want to make sure you guard against the opposite. You want people to solve problems for customers, as opposed to solving problems because they like the technology, and they think it’s cool. And you see this a fair bit.”
“If you look in the enterprise technology space, there are some providers who are competitor-focused,” he said. “They look at what their competitors are doing, and they try to fast-follow and one-up them. We have a competitor like that across the lake from us here in Washington.”
“Then you have a number of other providers who are product-focused,” Jassy said. “And they say, ‘Look, it’s great that you have an idea of a product Mr. and Mrs. Customer, but leave that to the experts.’ That’s the group that you’ve got to be careful about, because they often are building things that they think are cool, as opposed to what really solves the problems for customers. At AWS, we’re customer-focused. What we build is driven by what you tell us matters to you. And even if you can’t articulate a feature, we’ll try to read between the lines, understand what you’re trying to build and invent on your behalf.”
Our instances are better than…
Compute is continuing to be reinvented, but Jassy says three major modes of compute are “here to stay.”
They include instances, which is the traditional way that people have run compute, particularly when they want to get at all the resources on a box for their application, he said. Then there are smaller units of compute such as containers, where people build micro-services, because it lets them move faster and be more portable. And the third is event-driven serverless computing, where people don’t want to worry about servers or clusters
“They’re going to be here for a long period of time,” Jassy said.
And AWS dominates when it comes to instances, according to Jassy.
“If you look at Amazon EC2, which is our service that vends instances to you, we not only have the broadest array of instances, but we also have most powerful instances within those families,” Jassy said. “These are things like the fastest networking instances, where we have 100 gigabits per second in all of our recent generations and up to 400 gigabytes per second in our P4ds. We have the largest high-memory instances at 24 terabytes for SAP use cases in our high-memory instances.
AWS also has the largest local storage instances with its D3en instances launched today with up to 336 terabytes, and the most powerful machine learning training instances with its P4ds, according to Jassy.
“We have the most powerful machine learning inference instances with our Inf1 instances,” Jassy continued. “We have the best price-performance graphics instances with our G4ad instances, which are coming in a week. We’re the only ones who give you a macOS instance type, which we just launched last night with our macOS EC2 instances that lets Apple’s millions of developers now leverage the cloud much more easily.”
AWS also is the only cloud provider that gives customers the ability to run instances with Intel, AMD and Arm chips, according to Jassy.
“It’s a very different set of capabilities than anybody else has, and we’re also iterating and innovating at a much faster clip,” he said.
Nitro and Graviton chips
People often ask how AWS innovates at such a rapid clip, and Jassy puts it to two reasons: AWS Nitro System, which is AWS’ underlying platform for its next generation of EC2 instances, and its Graviton chips.
AWS spent five years rebuilding the virtualization layer in its compute platform and launched Nitro in 2017.
“We took the virtualization of the security, networking and storage off of the main server chip, and we put that on their own Nitro chips,” Jassy said. “It meant that you got all the CPU to run your instances, so you get performance that’s indistinguishable from bare metal, but at a lower price. It also meant you got a stronger security posture, because it used to be that when you had to troubleshoot VMs, you had to worry about whether somebody would do something to the main server with your instances. But because the security now is on that separate Nitro chip, you don’t have to worry about that.”
“What it did for us was, because we broke out a bunch of those pieces into separable cards or chips, it meant we didn’t have to make changes in making all these different things change and evolve in lockstep, which allows us to innovate at a much faster clip,” Jassy said. “What that means for you is that…instead of every two to three years, you get innovative, brand-new, change-the-game-types of instances in months. That’s a big difference.”
AWS’ work on chips also has allowed AWS to innovate at a rapid clip, according to Jassy.
“We have a deep relationship with both Intel and AMD, and we will for the foreseeable future,” he said.
But AWS realized a few years ago that if it wanted to continue to push the envelope of price performance -- which customers had asked it to do -- it had to develop some of its own chips.
“So we acquired a company called Annapurna (Labs in 2015), who were sophisticated and very experienced chip designers and builders, and we put them to work,” Jassy said. “We tried to pick chips that would allow you to get the most done and have the most impact for your business.”
AWS started with generalized compute and had its team build a chip on top of Arm that it calls Graviton, which first manifested itself in A1 instances.
“They were really for scale-out workloads -- things like web-tier workloads,” Jassy said. “And people loved them. They used them a lot quicker than we ever imagined. And they said, ‘Gosh, if you would make the chip more powerful, so we could use it for more of our workloads, that would really change the game for us.’”
Graviton2, AWS’ second version of the Graviton chip, gives customers 40 percent better price performance than the most recent generations of the x86 processors from other providers, Jassy noted. Those manifest themselves on C6g, M6g, R6g and T4g instances.
“That is a big deal,” Jassy said. “Think about what you can do for your business if you have 40 percent better price performance on your compute. Customers have loved this. We have a large number of customers who are already using it, from Nielsen to Netflix to Snap and Lyft and Next Roll. And we have, announcing today, a brand new Graviton2 instance, which is going to be the C6gn instance, which is our compute-heavy and network-heavy instance with 100 gigabits per second that will come in the next week or two.”
“We are not close to being done investing and inventing with Graviton,” Jassy said. “People are seeing a big difference.”
In the last several years, customers have been moving to smaller and smaller units of compute – namely containers and serverless – and two-thirds of containers that run in the cloud run on AWS, according to Jassy.
“People really love containers,” he said. “It allows them to build these smaller chunks of compute, which lets them move faster as well as be more portable. If you look at the growth in containers in computing, it’s pretty astounding, and the vast majority of it continues to run in the cloud on top of AWS.”
That’s because while most other providers have one container offering -- typically a managed Kubernetes offering -- AWS has three, according to Jassy.
“If it turns out that what you value most is using the open-source Kubernetes framework, then we have our Elastic Kubernetes Service – EKS,” he said. “If it turns out what you value most is having the deepest integration with the rest of AWS platform, you use our Elastic Container Service or ECS, which...since we control it, we can make sure that everything launches integrated with ECS right from the get-go. If what you value most in containers is running containers without having to worry about servers or clusters, then you use AWS Fargate, which is our serverless container offering, which nobody else has anything like.”
When AWS launched its container offerings, it wondered once it had a managed Kubernetes service, would people use the other offerings, or did Kubernetes have so much resonance that people would only use that, Jassy said.
“What we found is that all three of these container offerings continue to grow like a weed -- unbelievably fast,” Jassy said.
AWS has more than 100,000 active customers using ECS, and billions of compute hours on EKS run every week on AWS, according to Jassy. Most of AWS net-new container customers start with Fargate, because it’s so easy to get going, he said.
“We actually have a lot of customers who use two or even three of these container offerings, because different teams have different preferences and have different use cases,” he said. “You want the right tool for the right job. You don’t want one tool to rule the world.”
Oracle and Microsoft databases: An ‘unhappy place’ for customers
Databases are right in the middle of every application, and they’re hard to manage: You have to set them up, tune and patch them, and ensure the right fault tolerance and performance, Jassy noted. That’s why AWS built Amazon RDS, its managed relational database service that launched about 10 years ago and has been “wildly” popular, he said.
“Despite the growth of things like RDS, it’s still true that the overwhelming majority of relational databases live on premises,” Jassy said. “They live largely with these old guard, commercial-grade database providers named Oracle and Microsoft with SQL Server, and this is an unhappy place for customers. This is why you’re seeing so much movement.”
“It’s unhappy, because those offerings are expensive, they’re proprietary, they have high amounts of lock-in, and those companies have punitive licensing terms, where they’re willing to audit you,” Jassy said. “If they find any discrepancy, they extract more money out of you. And these companies also have no qualms about changing the licensing terms midstream on you. Just look at what Microsoft did with SQL Server in the last year or two: They basically changed the terms, so that you can’t use your SQL Server licenses anywhere but Microsoft’s cloud. Is that good for customers? Hell no. Is that good for Microsoft? I think they think so. I think it’s short-term thinking, because our experience over the fullness of time is that customers flee companies the first chance they get when they feel like they’re being abused. And this is something that customers are fed up with, and they’re sick of, and it’s why they’re moving as fast as they can to these open engines like MySQL and Postgres.”
But to get the performance of the commercial-grade databases in those open engines, it’s hard work, according to Jassy.
“We’ve done a lot of it at Amazon, and our customers asked us to fix that problem for them, and that’s why we built Aurora,” he said. “Aurora has 100 percent compatible versions with MySQL and Postgres, has several times better performance than those community-grade versions. It has at least the same fault tolerance, durability and availability as the commercial-grade databases, but at one-tenth of the cost. This is why customers have been flocking to Aurora as quickly as they have.”
Aurora has been the fastest growing service in the history of AWS since its launch in 2014. AWS has more than 100,000 customers using Aurora, including Airbnb, AstraZeneca, BP, Capital One, Fannie Mae, Petco, Verizon and Volkswagen.
“When you think about the term hybrid and hybrid infrastructure, I think a lot of people believe that this term and these solutions are pretty set,” Jassy said. “In our very strong opinion, both the definition of the term and the solutions themselves are innovating and being reinvented really quickly. When people ask, ‘what’s hybrid?’ typically people view it as a mix of modes, and people defined it early on as a combination of cloud alongside on-premises data centers. And one of the reasons it was defined that way, is the people who popularized this term were on-premises infrastructure product providers, and they wanted to ride along with the momentum of the cloud.”
“It led to all this breathless debate that whether this was going to turn out to be a binary situation -- would you only use the cloud or only use on premises,” Jassy said. “We probably contributed a little bit to that confusion, because we stated our then very strong belief -- and now even stronger belief -- that the vast majority of companies, in the fullness of time, will not have their own data centers, and those that do will have much smaller footprints.”
“We knew that it would take several years, and so we just spent a lot of our time in the early years of AWS on the cloud-specific pieces and then building sensible bridges back to on- premises data centers,” Jassy said. “And these are things like virtual private clouds or VPCs or Direct Connect or Storage Gateway. But in the meantime, you had a number of companies who tried to jump on owning what hybrid was and build all of these hugely hyped capabilities that were supposed to be hybrid capabilities and never lived up to the hype and really never got any traction.”
“We were watching this happening, and we went back to first principles, and we asked ourselves, ‘So, wait a second, what really is hybrid?’ So it’s cloud and on premises? Well, what does on premises mean? Is it just on-premises data centers? What about a restaurant, is that on premises? What about an agricultural field, is that on premises? If those are on premises, they have very different requirements than on-premises data centers. And so we think of hybrid infrastructure as including the cloud, along with various other edge nodes -- on-premises data centers being one of them, but there are several of them. The way that customers have told us they want to consume our hybrid offering is with the same APIs, the same control plane, the same tools and the same hardware that they’re used to using in AWS regions. Effectively, they want us to distribute AWS to these various edge nodes. So we reimagined for ourselves what hybrid was, and we started to build solutions that ticked off the biggest use cases, but in a way that worked for customers, both short and long term.
That led AWS to its joint offering with VMware.
VMware Cloud on AWS
Most of the world has virtualized on top of VMware, so AWS started working with VMware CEO Pat Gelsinger and his team on how to build VMware Cloud on AWS, which launched initially in 2017, Jassy said.
“That allows customers to use those VMware tools they’ve been using for many years to manage their on-premises infrastructure and manage their infrastructure on AWS,” Jassy said. “This is a very unusual collaboration. There’s no other managed service that VMware runs with another cloud provider. There’s none that have the functionality and capability of this VMware Cloud on AWS. It’s not just that both VMware and AWS have its engineering teams and its product teams closely tied at the hip, but also our field teams and our partner teams work together with customers. It’s a very unusual partnership, and it’s gaining a lot of momentum and a lot of steam.”
VMware Cloud on AWS customers include S&P Global, PennyMac, Johnson & Johnson, Philips, Palantir and the Scottish government.
“You also see the growth (in) almost double the amount of nodes year over year,” Jassy said. “IDC just had a report that showed over five years, you get a 500 percent return on investment. There’s a lot of momentum in VMware Cloud on AWS, and it’s really, really handy as you’re moving from on-premises infrastructure to the cloud.”