I was speaking with Jeff Bezos here at ETech earlier today about the Amazon Web Services business, and we got around to the topic of competitors-to-be. He asked me who I thought might go into that business. (Not that Jeff needs advice from me.) I said that it would be limited to companies with a strong reputation for datacenter infrastructure: Google, Microsoft and IBM came to mind quickly, although I discounted Microsoft because when it comes to compute services, I felt it would be politically difficult for them to offer LAMP-based servers. Jeff added HP to my list, which makes good sense.
But we agreed that it’s one thing to venture into the storage/servers-on-demand business and it’s another to do so successfully. As Jeff pointed out, it’s a high-volume low-margin business, in which Amazon has been notably successful. What about these other players? How might they succeed under those circumstances? HP’s heritage is quite the opposite — high margin — although with the Compaq acquisition and subsequent upheavals, they have had some success in the lower-margin PC business. Microsoft doesn’t have much of a track record in this commodity-type market. Google probably does. IBM certainly doesn’t — Global Services is a high-margin business — but if they started an entirely separate business unit with an all-new economic model, they might be able to do it. IBM certainly has the infrastructure experience. So my guess is that Google is the #1 potential competitor to AWS, with IBM and HP as less-likely players.
Whom am I leaving out here?