Meta: Cloud Platform has continuously developed and affirmed its key role in the modern life. Let's have a look at the following piece of writing titled "Google Cloud Platform's Development & Traditional Firms' Foreseeable Fade" to know more about this trend.


After ten years of establishment, Amazon Web Services (AWS) has continuously developed and become the biggest player in the fast-growing Cloud Platform market. There is no question Amazon is turning the screws on the $140 billion data-center-tech industry.
During the process, AWS has sent shockwaves through the traditional enterprise sector. In a recent interview between Business Insider and Mr. Werner Vogels - Chief Technology Officer (CTO) of Amazon, also in charge of AWS, Mr. Werner Vogels had explained why hardware companies aren't going to get any respite any time soon.

Hardware producers will be squeezed by the development of cloud platform

Nowadays, instead of buying computers, equipment, and software, both small and big firms tend to hire the equipment from cloud computing providers. This is clearly bad news for such firms as IBM, HP, Sell EMC, Cisco, and other producers of hardware for servers, storage devices, and management software.

Normally, IT companies would simply shift their sales efforts toward the newer, growing market. They try to sell their products to cloud computing providers instead of other firms. These cloud computing suppliers are building data centers and installing hardware at high speed.

However, cloud computing providers are producing their own equipment instead of buying them from IT equipment suppliers. Besides, they are able to produce new hardware designs at a higher speed, lower prices, and better quality. Facebook is one of the outstanding examples for this, with the Open Compute Project (OCP). In this project, engineers openly share their homegrown hardware designs with anyone who wants them, and it has become an industry phenom.

Similarly, Amazon designs and builds their own data centers and infrastructure network, to boost the effectiveness of AWS.

To operate at a scale that Amazon is doing, it is necessary to start building your own server infrastructure network. This will become an advantage,” Mr. Werner Vogels explained.

Cloud computing platform is a multi-benefit service

It is useful to create unique network arrangement for one’s businesses,” Mr. Werner Vogels said, adding that this is the process of transferring initial capital to operating capital.” “But Amazon always prioritizes capital issues as one of their fundamental building focuses. Therefore, whatever they do to raise their operating effectiveness will become customers’ benefits,” Mr. Werner Vogels added.

By using AWS, businesses transfer their IT department to monthly operating costs. But Amazon has still invested a huge amount of money for their data centers, which is a motivation for the firm to make everything at the lowest prices, Mr. Werner Vogels noted.

Amazon’s standards are so high that they can use not only available buildings, network, or resources, but also others to ensure they have everything with the highest possible standards,” Mr. Werner Vogels said.

That’s why traditional firms with a small market share in the IT market has gradually been removed when IT firms transfer to Amazon’s cloud computing services.

Amazon’s message is particularly worrying for traditional IT firms because it does not just apply to itself. According to Mr. Werner Vogels’s logic, anyone above a certain size will eventually find it better to start building their own hardware.

That is already playing out with Facebook's OCP project. Although Amazon has yet to publicize that it is working with the OCP, just about every large cloud company has signed up, including Apple, Microsoft and, more recently, Google. And so have some very large enterprises like Goldman Sachs.

While some firms like Dell and HP are involved in OCP, they are not in the driver's seat. For the first time, that seat is filled with the companies who are using the equipment, not the firms selling it.

Mr. Werner Vogels believes the move to the cloud will get even more intense (and most market researchers agree with him).

"The startup world is absolutely different today than it was ten years ago. A typical investment ten years ago, to enable a business to be off the ground, the initial investment was around $5 million. Today, for $50,000-$100,000, you can start your own business. The rise of the whole startup culture is largely driven by cloud.

The same thing is happening now to already established companies, even those who previously ran their own private data centers.

Moving over to the cloud allows companies to have their engineers focus on things that matter to the business,” he told Business Insider.

“This isn't a winner-takes-all market”

Mr. Vogels does not think much of his competitors, claiming that they are all years behind. Although he did not give specific names, most people see cloud platform as a race between market leaders such as Amazon, Microsoft, and Google, with other players like IBM.

“If you look at other cloud providers in the market, there’s quite a few of them still in the phase where AWS was five or six years ago, in 2010, at the time we were still much more focused on the infrastructure than the sort of rich collection of services.”

But he acknowledges that there is room for more cloud providers besides AWS But, once again, he did not give specific names.

“This is not a winner-takes-all market,” Mr. Vogel says. “I think given the changes we have seen in the last ten years it is hard to anticipate which are the players to be left in 10 years from now, or who will be the main players in the market. I definitely think AWS will be there and have a prominent role in that world.

If Mr. Vogel’s predictions are right, from the perspective of the traditional enterprise sector, it does not matter who comes out on top: Whoever it is, they will end up building their own technologies.

Do I think there will be fewer and fewer data centers over time?” Mr. Vogels says. “Yes, absolutely.