Andy Jassy’s rise to the CEO of Amazon shows the rising power of the cloud

The battle for the cloud takes place in all industries – from video games to cars and space – and companies large and small.

For Amazon, cloud computing has been a booming business that is very profitable. Amazon Web Services, or AWS, generated just over 10% of Amazon’s total sales in the last quarter of last year, but earned more than half of the company’s operating profit during that period. AWS’s revenue grew 28% in the previous three months to $ 12.7 billion, and its operating profit was $ 3.6 billion.

For executives, the cloud is increasingly becoming a cornerstone on a corporate scale. Microsoft CEO Satya Nadella led the software giant’s cloud business before rising to the top job in 2014. International Business Machines Body.

last year he addressed his cloud chief when he came to appoint a new CEO to help revive growth.

Mr. Jassy’s appointment – replacing Amazon founder Jeff Bezos as CEO in the third quarter – is particularly noteworthy, as Mr. Jassy takes over not only a technology company, but one of the world’s largest retailers.

“This speaks to how important the cloud is to our economy,” said Rishi Jaluria, an analyst for investment research firm DA Davidson & Co. “With Andy Jassy at the helm of the entire Amazon, it shows how the company wants to bring this DNA into the AWS center for the entire Amazon. ”

The breadth of tools now offered by Amazon and others through the cloud has exploded as companies in the industry collect more data about their products, customers and employees. Cloud providers now offer applications to, for example, help manage and analyze that information, increasingly using artificial intelligence software to automate processes.

Investors are increasingly rewarding companies that have embraced cloud computing and had a weaker image of those struggling to adapt.

Snowflake Inc.,

a company that provides tools to help companies manage their data on multiple clouds, went public last year in a successful public offering. Shares, down from December highs, rose about 18% since the start. Databricks Inc. Data Analysis Startup It recently raised $ 1 billion, giving the San Francisco-based company a $ 28 billion valuation. Salesforce.com Inc.,

launched more than 20 years ago as a cloud-based software company, it has become one of America’s largest enterprise tool providers and has used its growing assets to help finance transactions, including a end of last year to buy cloud-based collaboration software provider Slack Technologies Inc.

Companies that have slowed down to embrace the cloud are trying to catch up. Larry Ellison, founder and chief executive officer of database provider Oracle Body.

, once rejected by cloud computing as a way. In recent years, Oracle has stepped up its cloud computing efforts and stepped up AWS staff. Mr. Ellison now regularly trumpets the company’s cloud operations on earnings calls and last year landed popular video conferencing company Zoom Video Communications Inc.

as a cloud client to cast Oracle credentials.

At the beginning of the pandemic, when US business spread, the multi-year increase in spending in the cloud seemed in jeopardy. Salesforce has narrowed its outlook for the full year, offering customers with a hard-paying vacation. IBM withdrew its guide in April throughout the year.

But the reality was different. The pandemic overwhelmed the cloud, while companies rushed to adopt tools to help them cope with remote work and other challenges during the health crisis. The Microsoft Azure cloud before the pandemic slowed as it grew. That has reversed in recent months. Azure sales rose 50% year-over-year in the December quarter, up from 48% in the previous quarter.

“What we have witnessed in the last year is the beginning of a second wave of digital transformation that has encompassed every company and every industry,” Ms Nadella said last month.

Amazon is the clear leader in the cloud in terms of sales, although companies differ in how they calculate the revenue generated by these activities. AWS had a market share of about 34% at the end of last year, according to Synergy Research Group. Microsoft was second with a 20% share, but narrowed the gap, according to Synergy Research.

Amazon’s growth in the cloud has not been without its challenges. In addition to increased competition, some retailers – such as Walmart Inc.

—Avoid AWS and team up with rivals because of concerns about Amazon offering more business and could.

The cloud is also increasingly a political minefield, as it becomes more important in everyday life. Amazon last month was surprised by the content-filled question of what should allow or block on its platform. AWS fired the conservative Parler social network from the cloud, saying the customer did not properly control its content and failed to remove content that violated Amazon’s terms and conditions. Parler is suing Amazon for action.

When a House group released a report last year on antitrust concerns surrounding major technology companies, AWS said it provided key infrastructure for companies competing with Amazon. “This creates the potential for a conflict of interest in which cloud customers are forced to consider patronizing a competitor, as opposed to choosing the best technology for their business,” the committee wrote. Amazon has stated that it does not use AWS to benefit its retail arm.

Amazon also caught the attention of the parliamentarian when a former employee was arrested in 2019 for orchestrating the Capital One Financial hack Body.

Write to Aaron Tilley at [email protected]