Amazon is not planning to spin off its Amazon Web Services (AWS) cloud division. Instead, AWS is likely to make acquisitions of its own in order to keep ahead in the cloud services market, according to its chief executive Adam Selipsky.
AWS is massively profitable for Amazon, with the cloud services arm pulling in revenue of $62.2 billion for 2021, 38 per cent higher than the previous year. Despite this – or perhaps because of it – people have been calling for AWS to be spun off as a separate concern both recently, and in the past.
Investors, for example, have been said to be keen to buy into AWS separately from its Amazon mothership because of the rapid growth the cloud services subsidiary is enjoying. Last year, it was reported that on revenue AWS was already bigger than either HP or Cisco.
Selipsky, however, said that Amazon has no current plans to spin out its cloud division, stating that “we think that our customers are very well served by having AWS be a part of Amazon.” The AWS boss was speaking in an interview with Bloomberg.
According to Selipsky, the cloud market is still in its early days, as only a relatively small percentage of enterprise workloads are currently in the cloud. This perhaps reflects the views of his predecessor Andy Jassy who used to say that everything would be in the public cloud (meaning AWS) eventually and even discouraged customers from using multiple cloud providers at one point.
Selipsky also said that AWS could maintain its lead in the cloud if it continues to move fast, a hint that the company may be looking to acquire capabilities that it will give it an edge. While the cloud services giant has followed a strategy of acquiring relatively small startups that are easier to assimilate, it is open to deals of all sizes, he said.
AWS has, in fact, invested in dozens of small firms over the years, such as Annapurna Labs, an Israeli microelectronics company which it bought in 2015 that is behind the cloud giant’s Graviton Arm-based processor chips that power some of its virtual machine instances.
Other small acquisitions include E8, an NVMe-over-Fabrics storage startup it acquired in 2019, and CloudEndure, another startup acquired in 2019 that develops business continuity software for disaster recovery, continuous backup, and live migration.
So what kind of companies might AWS be looking at next? Some industry sages hold up Salesforce as a potential candidate, following the announcement last year of a broad partnership between the two firms around building and deploying business applications.
Speaking of Amazon… Online merchants will be able to put a button on their websites that allows netizens to order stuff using Amazon’s delivery infrastructure, a feature dubbed Buy with Prime. So far, this program is invite only, and suppliers must be using Fulfillment by Amazon already, though it’s set to expand through the year.
One analyst told The Register that a capability that AWS currently looks weak in is multi-cloud management. Google has Anthos, which provides a way to manage containerized workloads running with Kubernetes across on-premises and public cloud environments, while Microsoft has Azure Arc, which extends its Azure management portal to services running on-premises or other clouds, so this is one potential area where AWS may look to make acquisitions.
Another potential area is security, according to another analyst, where there are currently lots of startups offering niche solutions, and former smartphone maker BlackBerry now specializes in security solutions such as BlackBerry AtHoc, a crisis communications solution for government agencies and commercial organizations.
“If a business area looks like it will be profitable, then AWS will enter it,” the analyst told us. ®