How AWS Became a Victim of Its Own Success

This has been an AWS love fest. We've heaped so much praise on them. It's like they've done everything right. It's amazing. There's one thing they missed. Ben, do you want to tell us about it?

Data warehouses. How is Snowflake its own fifty billion dollar company?

Unbelievable.

It stores data in AWS and other public clouds, and it is its own fifty billion dollar company. And what Amazon would tell you is, "We have Redshift, and it's one of the fastest growing Amazon services ever, and it's doing really well." But you know, the databases team at Amazon, that whole org has to be very, very unhappy that Snowflake managed to, I mean, run the gauntlet on the data warehouse market.

It's crazy that AWS did not do this. [chuckles]

It's probably AWS's biggest failure, and the question is, why? And I think there's a few areas. One is just big company stuff. I think before launching something, when you're at Amazon's scale, and now that they are the trusted partner of all these IT departments, you've got these security things, operational things, SLA guarantees that they're fully committed to, and I think it hamstrings your ability to really streamline a product, be opinionated, and get something to market that's both fast and intuitive and built for the user. I think Redshift requires a lot of customization, whereas Snowflake is awesome for developers out of the box. And it's funny that the playbook that Snowflake ran is pretty similar to the playbook that AWS ran when they were just S3 and EC2, serving individual developers. So there's a little bit of, like, they're a victim of their own success on this front. The other one is, Ben Thompson pointed this out in a piece that we'll link to in the show notes. It's right there in the name. They're fighting Oracle. They're fighting the last battle with Redshift. It's: Hey, take your Oracle-style data warehouse and basically do that in the cloud, rather than... Lots and lots of Snowflake customers never would have become Oracle customers. It was a different customer segment with a different set of needs. I mean, it's just a fantastic product, and that's not really who Amazon was serving. And there's new leadership there now, and they're getting the house in order, and I think they recognize this, but this was a whiff.

Yeah. Big, big whiff. Probably not a whiff on the order of-

Microsoft and Google whiffing on cloud?

Yes.

Yeah. It's an order of magnitude or two smaller.

So AWS, we're gonna do analysis now, do grading. There's no way this isn't gonna be a very high grade, but, like, if there's a black mark, this is it.

The other thing where they're sort of a victim of their own success is, you know, the Amazon two pizza team thing led them to launch all these different services. Rather than having a cohesive product strategy, AWS has kind of been Alphabet soup, and I haven't logged into the AWS dashboard in a while, but it used to just be so overwhelming. So many amorphous logos that all kind of feel like the same thing, where it's hard to disambiguate between two things. And I think Amazon realizes this because their keynotes now seem to be much more about pitching these vertical solutions. Like: Here's this thing for this industry, here's a vertical solution, here's case studies of other people in your industry, rather than first presenting you with, "We have four hundred and seventy-six services." And I think that in the keynotes, they've also really dialed back on what used to be the drumbeat of the keynote, which is, "We launched what we consider to be seventy-four significant features this year, and we're excited to tell you all about them." I think that won for a long time, and now it's created so much confusion for customers that that's actually, like, the bull case for a Google, who is sort of a newer entrant, who's coming in with a more cohesive product strategy and can help customers really understand what they should be doing, rather than being like, "Hey, there's no guardrails. Good luck." And AWS keeps launching even more new services now to provide those guardrails and say, "Well, if you use whatever, whatever manager, then you can't get yourself into too much trouble." And it's like, "Oh, cool, a thirteenth standards body." [chuckles] They definitely have a little bit of that cleanup effort going on now, but hey, they got market leadership, and they make far more revenue and far more operating income than anyone else, so it's hard to argue with.