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Amazon's Profits Are Floating On a Cloud (Computing)
HughPickens.com writes: The NY Times reports that Amazon unveiled the financial performance of its powerful growth engine for the first time on Thursday, and the numbers looked good, energized primarily by renting processing power to start-ups and, increasingly, established businesses. Amazon said in its first-quarter earnings report that its cloud division, Amazon Web Services, had revenue of $1.57 billion during the first three months of the year. Even though the company often reports losses, the cloud business is generating substantial profits. The company said its operating income from AWS was $265 million.
Amazon helped popularize the field starting in 2006 and largely had commercial cloud computing to itself for years, an enormous advantage in an industry where rivals usually watch one another closely. At the moment, there is no contest: Amazon is dominant and might even be extending its lead. Microsoft ranks a distant No. 2 in cloud computing but hopes to pick up the slack with infrastructure-related services it sells through Azure, the name of its cloud service. Amazon executives have said they expect AWS to eventually rival the company's other businesses in size. The cloud business has been growing at about 40 percent a year, more than twice the rate of the overall company and many Wall Street analysts have been hoping for a spinoff.
As for Google, the cloud was barely mentioned in Google's earnings call. Nor did the search giant offer any cloud numbers, making it impossible to gauge how well it is doing. But the enthusiasm of Eric Schmidt, Google's executive chairman, was manifest when he spoke at an event for cloud software developers this week. "The entire world will be defined by smartphones, Android or Apple, a very fast network, and cloud computing," said Schmidt. "The space is very large, very vast, and no one is covering all of it."
Amazon helped popularize the field starting in 2006 and largely had commercial cloud computing to itself for years, an enormous advantage in an industry where rivals usually watch one another closely. At the moment, there is no contest: Amazon is dominant and might even be extending its lead. Microsoft ranks a distant No. 2 in cloud computing but hopes to pick up the slack with infrastructure-related services it sells through Azure, the name of its cloud service. Amazon executives have said they expect AWS to eventually rival the company's other businesses in size. The cloud business has been growing at about 40 percent a year, more than twice the rate of the overall company and many Wall Street analysts have been hoping for a spinoff.
As for Google, the cloud was barely mentioned in Google's earnings call. Nor did the search giant offer any cloud numbers, making it impossible to gauge how well it is doing. But the enthusiasm of Eric Schmidt, Google's executive chairman, was manifest when he spoke at an event for cloud software developers this week. "The entire world will be defined by smartphones, Android or Apple, a very fast network, and cloud computing," said Schmidt. "The space is very large, very vast, and no one is covering all of it."
Amazon is my favorite nonprofit organization! Their investors are footing the bill for that 100 pound room air conditioner I had shipped to me via Amazon Prime 2 day shipping, and all those times they spent 2-3 dollars to to ship me a 5 dollar item.
of enterprise computing .. Prehaps open stack or derivatives will be the default platform.
What is probably the saddest is Microsoft. Their two biggest cash cows (Windows and Office) are under tremendous pressure. And they really have trouble innovating in ways that are replacing that income. They chase everybody else, late to the game: mp3 players, search, cloud services, online email, smartphones, etc. Their constant focus on Windows over the Ballmer years really blinded them to all else that was an opportunity in the computing world. And so companies like Amazon, Apple, and Google are there instead.
I'm a Google Fanboy so when I wanted to set up a cloud server for a webapp I went straight to Cloud Compute. I had been burned by AWS phantom charges in the hundreds of dollars that could not be identified from their management console. Starcluster based OpenMPI "hello world" experiment turned $500 CC expense.
Anyway, right as I'm getting settled in to Cloud Compute(very happy with their tutorial on setting up mongoDB etc.) I'm building my web app and Cloud Compute suspends my account for terms of use violation out of the blue. No explanation. Just got flagged by heuristic analysis based on CC country vs. IP address continent probably(on vacation).
Whatever reason they flagged the account, I went through a nightmare ~1 week trying to get my account unfrozen. I eventually gave up and started a new AWS account which is now billing me $30/month for a Windows Server 2008 "Workspaces" instance I NEVER use. Moral: Google TOU "Kangaroo Courts" and shit customer support in appeals lost them my business, so I have a hard time crying for my favorite company on this front.
If they can't handle their shit with someone who WANTS to give them money I have no sympathy.
Isn't AWS used for more than cloud storage and computing? It's also used for simple web hosting. Did they subtract the revenue from website hosting from that $1.5B figure.
What's the difference between cloud storage + computing and "web hosting"? AWS just provides the platform.
A bigger machine in a far away place always had the cost advantages of the economy of scale. Everytime there is a jump in connection speeds and bandwidth some customers found it cheaper to "out source" computing to a remote machine. But eventually the advantages of local storage and local computation adds up. So let us see how long this iteration lasts.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Given that Microsoft seems to be investing heavily in Azure, I'd wonder exactly how they plan to beat AWS. AWS had some new machine learning algorithm added a month ago; Azure doesn't have that. Either way, however, is a win. If Microsoft's making some fatal mistake with their new business model, then maybe they'd go bankrupt and help the industry by going open-source before death. If Azure stays where it is or ranks up in usage with its SaaS model, then there'll probably be some interesting competition between them two and Google with large user bases. Either way, there's competition, which will (almost) forever spiral downward prices and upward capabilities.
Seems like this should really be IBM's forte. I wonder why they didn't jump into it with both feet.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
When you hear a company bragging about Operating Income, pro-forma earnings, EBITA, etc. instead of GAAP results you should assume they're blowing smoke. Those numbers are easily cooked and leave out too much.
Today's computing model is continuing to shift towards mobile devices with finite power supplies, thermal envelopes and limited/fragile storage.
And expensive connections. The going rate for a cellular Internet connection in the United States is $10 per GB uploaded or downloaded.
Isn't AWS used for more than cloud storage and computing? It's also used for simple web hosting. Did they subtract the revenue from website hosting from that $1.5B figure.
AWS includes far more services than I've ever heard of. "Cloud computing" is EC2, which you could use for web hosting once you grow large enough to need a full VM (or 1000). I'm sure theyalso have some web hosting product somewhere for personal-sized sites too. All of that, plus the storage and so on - everything "cloud" - is AWS (I know of their queueing service and their load balancer service, but I've only looked for the obvious stuff).
The fact that it's collectively profitable despite the price wars should be a real wake-up call for anyone using "cloud" as a loss leader.
Socialism: a lie told by totalitarians and believed by fools.
Web hosting companies will take a steep penalty to you for using too much CPU or memory. And usually ask you for your money in advance.
The summary appears incorrect. The linked article says that MS has annualized revenue of $6.3 billion from "cloud" business.
Google's $1.57 billion translates to an annual number of $6.28 billion from Amazon Web Services.
I'm not sure how either company defines what is included in those numbers.
Does anyone have better information or metrics?
BlameBillCosby.com
Web hosting companies will take a steep penalty to you for using too much CPU or memory. And usually ask you for your money in advance.
The only difference between a web hosting company and Amazon is the billing model?
In addition to EC2, there are lots of other services that are encompassed under AWS that compliment EC2 nicely - RDS is their service for standing up easy database instances that take care of most of the configuration headache associated with the big relational databases out there (pgsql, mysql, mssql, oracle). Route53 is a scriptable DNS service. CloudFormation gives you tools to automate standing up entire application stacks including DNS records, load balancers, application servers spread across availability zones for redundancy, etc. OpsWorks gives you a Chef-esque service for managing software deployments. IAM roles allow you to grant servers access to other AWS services without having to deal with certificates / passwords / keys in an atomic fashion. There are numerous other services that I'm not even using right now, but exist as replacements for things we've already wired up in EC2 previously to Amazon announcing them.
It's a hell of a package that makes things like Microsoft Azure look like a joke in comparison, and is cost competitive with building out your own datacenter as long as you use it properly, and think about what you're doing a little - make sure you back your shit up out of AWS so that you always have an "off-site" copy, for example. And if you use something like Chef / OpsWorks, you can recover from a disaster practically anywhere if you have your cookbooks, source code, and data backed up.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
Incorrect. http://azure.microsoft.com/en-us/services/machine-learning/
They're three separate services (and only three of the zillion that AWS provides).
Cloud storage is just that: storage in the cloud (usually object storage, so you can access files using HTTP)
Computing is having a virtual system available, so take your laptop or desktop and move it somewhere else. Very handy if you need compute power some of the time but don't want to go through the hassle of getting rack space/networking/etc. You still have root on it, so the entire system and all provisioned resources are yours.
Web hosting is usually shared, so it's you and a bunch of other people on the same server, probably sharing the same hardware and storage. You don't have root and have limited ability to make changes. Lowest cost, but lowest capabilities. If you have a basic wordpress or flat HTML site it would work fine for you. If you want to get into more demanding sites or introduce failover or load balancing you need to step up to computing.
Net profits of $214 million on revenue of $29.33 billion. ref
'I'm a Google Fanboy .. they flagged the account, I went through a nightmare ~1 week trying to get my account unfrozen."'
:)
I believe you
It's a hell of a package that makes things like Microsoft Azure look like a joke in comparison
I found the exact opposite, but we are mostly a Microsoft shop. Working with Azure was dead simple, including setting up auto-scaling (Which wasn't offered by Amazon, at least when we were looking), so that our website scales up during peak times, and drops back down during the quieter times, automatically. It also ahs staged publishing which we use a lot, and the ability to switch our public website between any of the multiple slots INSTANTLY with no downtime is also a very big plus. Again, something we couldn't do with AWS at the time we looked.
Publishing directly from Visual Studio is nice (Not offered with AWS -- except via FTP which does a complete site upload instead of only differences).
Automatic SQL Backups and rollbacks to point in time is also dead simple in Azure, but I'm not sure it is even possible in AWS outside buying an enterprise SQL Server license and managing it yourself.
Everything else we looked at was either better at Azure or the same between the two with the exception of their CDN, which I found better at Amazon than Azure at the time. As that wasn't a requirement for us, it was a pretty simple choice (even though we have both Azure and AWS corporate accounts). Our other departments that are java & PHP based prefer AWS however.
AWS may not hold your hand as much as Azure, but everything it does is far more polished and performs far better. All of the features you mention for Azure AWS has and has had for far longer, except for direct Visual Studio publishing.
Auto scaling in AWS is far more powerful than Azure. You can scale based on several different metrics, not just CPU load. It is not "just there" like in Azure in that you must explicitly configure it, but it is worth it for the massively increased control. You can easily replace instances in an AWS load balancer with completely unrelated ones, something that is impossible in Azure
Staged publishing also exists in AWS as Elastic Beanstalk, which is more comparable to the standard PAAS Azure offering. You can switch websites instantly between any of your up to 200 environments, not just two (live and stage) like in Azure. Again, it doesn't hold your hand, but it is far more powerful and flexible.
MSSQL is an absolute joke in Azure which is sad given that it is run by MS. The performance is abysmal and it is Azure's cut down version of SQL, not the same as a real server. AWS lets you run your own on EC2, or use their managed RDS service. RDS offers point in time restores up to 35 days at any point even on their cheapest MSSQL express based offerings. Azure requires you to get their "premium" SQL at an inflated price for that level of backup. RDS is also still a full server without any missing functionally like SQL Azure. Security of SQL Azure is also non-existent. It does IP filtering at the DB level, no firewall. The next slammer type worm will infect every Azure DB including yours.
On top of all that performance is not even comparable between the two services. Azure purposefully compares their offerings to deprecated AWS instances because current AWS instances blow them out of the water in both price/performance and raw performance. I/O performance is basically non-existent in Azure, their managed storage system is pathetically slow.
Azure is designed to make it easy for a developer who has zero infrastructure and networking knowledge to get his code out into the world running on a shitty system. This is a very bad thing. A developer with even a tiny bit of infrastructure knowledge can see how bad Azure is.
If you use CloudFormation, you get auto-scaling. In fact, if you write your own CloudFormation template, you can get easy drop-down menus of minimum / maximum instances, and how many to scale at a time.
No, Amazon doesn't have direct publishing from Visual Studio, but we've worked around that by using a Jenkins continuous integration environment and Chef. Jenkins automatically builds any code merged into watched Git branches, and if the build succeeds, drops it into an S3 bucket. In 15 - n minutes, the dev / stage servers will run Chef, which sees the new version and deploys it per the app's recipe. It all happens as soon as someone code reviews and merges the branch back.
With RDS, you've got so many options for backup it's not even funny. You can have read replicas in different availability zones. You can have snapshots. You can use Cloud Protection Manager to automatically snapshot. You can use replication to pull data out of RDS to a database running on an EC2 instance for ETLs, or to ship it somewhere else. You can use that same replication to have it sit on an instance where you are running a database backup daemon of some type, which offloads that work from your production database. The only thing you don't get with RDS is access to the OS image it's running on, or the filesystem. Anything else is fair game.
As the other guy said, Azure holds your hand more, and is much more Microsoft-centric. But the offerings are not nearly as deep, or as wide. Especially in networking - with AWS I create multiple private clouds that are walled off from each other and geographically separated, and only allow the traffic that I want across a VPN tunnel for DR purposes. I can peer together AWS virtual private clouds to allow network access between the all the instances, but retain security for departments to only manage instances in their account, in a web form that takes two minutes to set up. Also, because of some luck, we're leasing space in a datacenter where Amazon has a DirectConnect node, so we can physically peer our company's network with a few VLAN tags, a fiber pair, and setting up some BGP neighbors; which also saves money on the network data because it's no longer going out through the Internet to get back to our datacenter.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
I might be mistaken, but according to what Amazon's description of RDS, they don't support read replicas of MSSQL.
Using Read Replicas, Amazon RDS for MySQL, PostgreSQL, and Amazon Aurora...
You can with Azure. You can also run your own SQL server if you prefer that as well, and you can set up VPNs and wall off sections, and even use your own local SQL server for fault tolerance (or performance of other local processes). I haven't seen anything you mentioned that you can't do in Azure (minus perhaps having a direct connect to their azure cloud -- but I haven't checked into that eitehr). It's just more difficult to set up with AWS.
Staged publishing on Azure is limited to 5 slots, not 2. But you are correct, it doesn't scale out to 200 slots. However, in Azure, you pay for the first slot, the additional 4 are free, while the same isn't true in AWS.
As for SQL performance in Azure, I can't make an exact comparison, but you always have the option of running your own SQL server if you don't like the SQL Service. And even the cheapest Azure plan gets your point in time backup/restore, although the amount of time increase as you change service levels (basic - 7 days to premium - 35 days) and the cost of a P1 database is roughly half that of a single "db.m3.xlarge" instance on AWS ($465 vs $968.40), and the price gets worse from there. Multi-zoned databases on AWS are basically full cost, while on Azure (called GEO-replicas), they become cheaper. Then tack on some more if you care about provisioned IOPS (which comes free with Azure, as all tiers are allocated that way), and you've quickly turned up a huge bill for the same performance from Azure.
As for AWS RDS being the "full" version of SQL Server, I suppose that is true if you only need the functions in SQL Standard (Amazon doesn't offer enterprise). Unfortunately, we use features only available in enterprise (like being able to enlist indexed/materialized views in queries automatically), and AWS RDS service doesn't support that while Azure does -- so your "full" version is less "full" than than your "not-full" version of Azure's SQL service. Amazon's RDS is limited to 1 replica, vs 4 in Azure (we don't actually use this, yet) as well.
As for the "slammer" idea, that is quite funny, when the exact opposite would be true assuming there still exists vulnerabilities in the Service locator service. Azure likely doesn't use the same code, while AWS does, so they would be more likely to be hit than Azure *IF* another vulnerability exists, but good job bringing up a 13 year old irrelevant vulnerability into the discussion.
You obviously have never compared SQL performance on Azure VS Amazon. To claim that an Azure P1 is even in the same ballpark performance wise as a db.m3.xlarge is laughable. A P3 (at $3461/month) is still an order of magnitude slower than a db.m3.large. There is NOTHING on Azure that can compete with with even a db.m3.medium simply because the I/O performance is so bad. Even if you fired up a D14 with SQL enterprise, any workload short of pure read-only would fall on its face once it tried to do any writes because the storage simply cannot keep up. I have extensively benchmarked using Microsoft's own SQLIO tool and at times found Azure storage giving less than one IOPS. Yes, less that one IO per second. Azure support confirmed that was normal and expected behavior.
You obviously also know nothing about networking to make such a comment about slammer. On Azure, SQL databases can be connected to from anywhere, any IP. There is no firewall at all. The IP filtering is all done in SQL code, which is extremely dangerous. A bug in the SQL code and you are owned. You cannot change this. RDS on AWS by default does not open the MSSQL port (1433 by default) the world. You must very explicitly both put an RDS instance into a public VPC subnet and then allow the world to connect. AWS will even tell you this is stupid and make you confirm. If there is a bug in the SQL code on RDS it is only an issue if you explicitly do something stupid. A stupid thing which is an unchangeable default on Azure.
You obviously know nothing about networking or the slammer worm because it affected the discovery/locator service on port 1434, not 1433, and yes, I know networking very well, thank you.
You might as well say the next time there is an http exploit all the web servers in the world are going to get hosed. Maybe we should put all web servers behind our firewalls to be safe. LOL.
As for AWS vs Azure performance, I'm not sure how you were testing but based on your "expert" opinions which are sorely misinformed, I'm guessing you did something really boneheaded. A P3 instance is set to give a minimum of 735 IOPS every second. So if you were getting less than one, I'd say that was a problem with the user. We use Azure to run our production sites and haven't seen anything of the sort you describe.
On Azure, SQL databases can be connected to from anywhere, any IP. There is no firewall at all.
Uh, no. You have to explicitly allow IPs in. Here's a link to "Azure SQL Database Firewall": https://msdn.microsoft.com/en-... .CFG file just as easily. Unless you are about to say that IPTABLES is insecure because it needs access to the filesystem to read it's .cfg file too. The filtering isn't done in SQL, ROFLMAO.
If you don't understand firewalls, there is a pretty picture if you scroll down. The first step "SQL Database Firewell" is a server-level IP firewall. Yes, the configuration is stored in the database, but that has very little meaning, it could have been stored in a
I've never tried a D14 VM with enterprise installed, but if you were getting poor performance, I'm guessing you did something extremely boneheaded like try to put the database on a remote drive instead of the local SSD.
Just out of curiosity, I fired up a D14 VM and loaded SQLIO on it. It came back with 253713 IOPs. If you got less than one, you were doing something very very very wrong. BTW, there is no reason to load SQL server of any type on the machine as SQLIO doesn't use it, so uh...yeah.
Did you set up a VPN to your local machine and then test how many IOPs you get to your local machine over a network share? LOL.