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This is the week that AWS owns the tech news cycle because anyone who cares about it is watching the stories coming out of the re:Invent conference. I watched Adam Selipsky’s keynote this morning and it looks like AWS is moving in a very traditional direction for tech companies: Away from tech-first, towards business-first. Which is inevitable but also dangerous.
Messages · The “S” in AWS stands for “Services”. So presumably, the biggest imaginable announcement would be of new Web Services. There was only one in among the avalanche of biz-talk: managed 5G, nice but not terribly exciting. Powerful message!
What were the companies either heavily name-checked or invited on-stage? DISH, NASDAQ, United, Goldman Sachs, and 3M. None of them West-Coast. None seen as tech players. Powerful message!
The number-one problem I hear about from every single tech leader I talk to is the extreme difficulty in hiring and team-building. So I’d think that providing developer force multiplication by automating away server management would be a big deal. None of that; the focus was almost all (except for a bit from 3M) on hosting existing applications. Powerful message.
There’s also the fact that a high proportion of developers and technologists viscerally loathe at least two of those highlighted companies; so impressing those demographics was not on the priority list. Powerful message!
History · Let’s look way back, to the year I graduated from University: 1981 (no, really). My first job was with DEC. At that point it was the second-largest computer company in the world. The largest was IBM, which was ten times our size and, as our leadership said, “growing at one DEC per year”.
DEC at that time had the coolest computers you could buy and nobody working where tech mattered wanted anything else. Leadership noticed that despite that fact, IBM was kicking our asses. And IBM people never really talked about technology, it was all business all the time. So the word came down from on high that we would too.
I remember going to the announcement of some new computer which was a one-hour presentation, and the first 45 minutes were how DEC cared above all else about the Modern Enterprise and Leadership Agility and Profit-oriented Innovation. This wasn’t a computer, it was a Business Solution! Meanwhile the audience got angrier and angrier because they wanted to hear about memory and form factors and cycle time and benchmarking and so on. Those things were eventually crammed into the last ten minutes of the session, and the computer actually did pretty well.
But the company didn’t. It was skidding downhill by 1990 and didn’t make it to Y2K. My own geeky tribe was pretty convinced that it was because if you wanted to sell computers, you should find people who needed to buy computers and talk about computers to them.
I saw a similar story when I worked for Sun, which for quite a while sold the coolest computers but eventually fell on hard times and was snapped up by Oracle. Oracle talks about business and only about business. Once again, the tech-nerd demographic sneered at Oracle’s lack of technical acumen.
I’m pretty sure my tribe was wrong both times. Here’s why.
Growth space · People think the cloud business is pretty big, and it is. AWS is running at $60B/year and by my guess represents somewhere between a quarter and a half of public-cloud spend, so let’s say the whole Public-cloud biz is in the range of $200B or so. Wow, that sounds big! But estimates of global IT spending are north of $4T.
That math says that 95% of IT isn’t on the cloud yet. Will it all move there? No, but it feels inevitable that the cloud revenue potential is at least 10× today. And where is that 10×? I’ll tell you where it isn’t: In the kind of startup and cloud-native scenarios that led the charge onto the cloud over the last fifteen years. It’s in Establishment IT, where by “Establishment” I mean “big organization with significant systems in production”.
Establishment-IT organizations are cost centers, mostly. They report to people who neither understand nor care about technology, and are incented to find cheap decent solutions to their business problems. So it seems pretty obvious that whoever figures out how to talk to that leadership is in a position to win the 90% of the potential cloud market that’s still up for grabs. And that’s not by enthusing about leading-edge Serverless Event-driven Container Orchestration or whatever.
Horizontal Selling · Here’s another problem that the public Cloud faces as it tries to expand into the enterprise, one I’m bitterly familiar with because I’ve spent my whole life working on general-purpose infrastructural software. Which inevitably leads to the following conversation:
Tim: “Check out this slick new optimized event router we cooked up!”
Product Person: “Great! What can I do with it?”
T: “Well, anything! You know, make distributed apps faster and better!”
PP: “You don’t get it. What actual specific job, like manufacturing cars or processing insurance claims, will this help with? So I can go and talk to people who do those jobs.”
T: “But your apps will be more flexible and robust, too!”
At the moment, pretty well 100% of AWS revenue comes from totally horizontal technology, so you should pity the Product and Sales people who have to build a bridge between, for example, DynamoDB latency and Fast-Fashion inventory management. The fact that they’ve gotten this far is a tribute to them.
I couldn’t help but notice that in Adam Selipsky’s keynote this morning, there was a specifically-called-out emphasis on vertical offerings, for example the “Fleetwise” automotive-telemetry thing (which however launched without a charter customer). I think it’s pretty obvious why AWS is doing this. But the absence of a track record is worrying.
Which way forward? · I’m not gonna offer any recommendations about how AWS should position horizontal tech to sell to Establishment IT. If I did, they should be ignored. [You know who’s really good at it? Andy Jassy.]
But I do have three pieces of advice for AWS on their keynote presentations:
The all-biz-all-the-time messaging implies a trade-off. You should do better selling into that huge 90%-of-trillions IT space that isn’t in the cloud yet. But you’re less likely to land the business of the next Netflix or Intuit or, well, Amazon.com. Maybe that’s OK, but also consider at least some messaging aimed at technology pioneers.
I think that current technology leaders, even in the fustiest corners of Establishment IT, are noticing that they’re having a big recruiting and staffing problem. Modern Cloud-Native tech lets you deliver more business-app goodness with fewer developer-hours. I think that angle is becoming increasingly strategic, and deserves keynote time.
Pick up the damn pace! That two-hour keynote was grindingly slow and contained maybe a half-hour of actionable information. Your audience mostly comprises really smart people and they appreciate high-intensity high-density discourse. (This is another space where you might want to learn from the Jassy style.)
More to come · I understand that we systems Morlocks aren’t the target audience for the big glamorous launch keynote from the CEO. Do I feel slightly disrespected and ignored? Yes. Am I going to go back and listen for actual technology announcements from one of the world’s most interesting technology companies? Sure.