Amazon CEO speaks with Fortune on a number of topics, including Amazon Web Services. This is the platform SalesLogix Cloud uses. His view is that proprietary data centers maintained by old school, Dot Com era SaaS vendors are basically boat anchors attached to their legacy applications. Think Salesforce. While legacy apps are focusing resources on infrastructure and platforms, new players can focus on the apps, or “secret sauce”.
Fortune: Speaking of picking up new skills to address consumer needs — you’ve addressed some customer needs by making substantial forays into cloud computing with S3, Elastic Compute Cloud, and the Relational Database Service. What’s next for cloud?
Bezos: One of the things you’re seeing is that companies without any legacy are no longer building any data centers. They’ve already stopped. So that’s a testament to how powerful this model is. That the only people still building these data centers are the people that are temporarily corralled into that model because of their legacy. That model is more expensive, less flexible. It’s not just more expensive, but it’s also capital expenditures instead of pay-as-you-go variable costs like it would be if you were using Amazon web services.
And what we’re starting to see now — and we’ve been seeing it for the last couple of years — is big enterprises starting to use Amazon web services. So that if you ask what’s coming over the next five years, you’re going to continue to see that transition where even companies with legacy are starting to use Amazon web services. I think it’s very exciting.
Fortune: Of course, you’re also starting to go head-to-head with big enterprise with this business, right? Companies like IBM see themselves in this space.
Bezos: We started working on Amazon web services six years ago. People forget because it’s grown so much, it’s more on our radar screens now, we’re doing it an innovative way. It’s not a me-too product. It’s a leader in this new industry, and so we don’t think of it as we’re entering this industry with all these big companies. We look at it as we’re doing something completely new.
Fortune: It’s come a very long way in a very short period of time.
Bezos: The right analogy here is the electricity grid. A hundred years ago if you wanted to run your factory, and you needed electricity, you had to become an expert in power generation. You had to buy your own electric power generator. You had to maintain it. You had to make your own electricity. And today, because of Amazon web services, you don’t have to be in the power generation business.
It’s not a differentiator for companies. So if you’re going to build your own data center and buy your own server hardware and manage all your own networking gear, and all of the things that you have to do, it has to be done at an A-plus quality level. But it’s just the price of admission. It’s not your secret sauce. It doesn’t help you differentiate from your competitors.
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