Boxworks 2016: Amazon CTO Werner Vogels says Amazon has always been a technology company, just one that happens to do retail really well
Over the past decade, Amazon has transformed from an online retailing giant into a technological heavyweight.
Amazon Web Services (AWS) revenues increased by 58 percent to £2.2 billion during the past quarter, while it has established itself as the leader in eBooks with the Kindle and has even dabbled in smartphones, tablets and video on demand.
But its CTO maintains the Seattle-based firm has always been a technology company – just one that happened to use its innovations to sell everything from books to groceries.
We just do retail really well
“You could have all the books in the world in one shop! But now, all these things are normal. My daughters are in their late 20s and don’t know a world without Amazon.”
Vogels argues that all the things that made its retail platform, such as its warehouses and self-service, so effective were actually technological innovations suited for a particular application – online shopping.
“Amazon is a tech company, we just happen to do retail… really well,” he quips. “We reinvented retail. Nobody wanted to read eBooks on their laptop so we invented a device. You have to invent yourself into this market. Sometimes these inventions take a while to settle but the Kindle and AWS [did].”
The most recent of these innovations has seen Amazon test drones for same day delivery.
Yet this reputation made potential customers a bit sceptical about its initial forays into the cloud space ten years ago. AWS was built to power Amazon’s retail business but could also be sold to other companies.
“One of the biggest challenges in the early days was ‘who would ever want to buy storage from a bookshop?’ The idea of Amazon as a retailer sticks in people’s minds, but we’re a tech company at heart,” Vogels noted.
Getting the business model right
Since then, AWS has grown at extraordinary rate and is the undisputed leader in a public cloud marketplace populated by Microsoft Azure, IBM and Google Cloud Platform. Vogels attributes AWS’ success to the pay-as-you go business model that nearly all cloud vendors now subscribe to.
“One of the things we thought about really hard when we built AWS was the model,” he explains. “We’ve bought [legacy IT products and services]. I still have nightmares as I never felt in control as the only way to bring the cost down was to sign long contracts. You would give [the vendor] this cheque up front and they didn’t care [after payment].
“We knew we had to be on our toes every day. We only get paid if you actually use [AWS]. We introduced a radical model that has transformed the IT industry and is one of the main drivers of cloud technology.”