Amazon (AMZN) Web Services is the most popular cloud platform in the world, accounting for 31% of global market share, according to Canalys. And the platform, which turned 15 this month, isn’t finished growing, at least according to Amazon CTO Werner Vogels.
Vogels, who has been with Amazon since 2004, sat down with Yahoo Finance to discuss the future of the preeminent cloud platform, where he sees it expanding in the future, and how 5G and space fit into the picture, ahead of his appearance at the all-digital SXSW.
“I think the distinction between physical and digital will disappear,” Vogels said, adding that AWS will continue to bring new intelligent capabilities to physical devices.
An example of that kind of change, Vogels explained, is Amazon’s Echo, a smart speaker. Despite being a relatively simple device, the Echo connects to AWS to gain access to the Alexa intelligent assistant and control smart home devices, capabilities that, without the cloud, would have required far more computing power.
5G cellular connectivity will go hand-in-hand with that kind of change, Vogels said. As 5G continues to proliferate, more devices and services will take advantage of it and, as a result, be able to connect to AWS, including everything from cars to factory lines.
AWS is Amazon’s biggest success. Sure, the company’s ecommerce platform pulls in more full-year revenue than AWS, $340 billion to AWS’s $45.47 billion in 2019. But AWS outstrips Amazon.com in terms of operating retail income, with AWS bringing in $13.5 billion to Amazon.com’s $9.37 billion in 2019.
Further expanding those margins for AWS is of paramount importance for Amazon, and to do so, the company is looking to the skies. Vogels says Amazon’s own AWS Ground Station service, which launched in 2019, exemplifies how the cloud platform is extending its reach into space.
“The expectation is that we will see a launch in the coming five years of at least 10,000, more satellites, and some of those are microsatellites,” Vogels said. “There's a lot of young businesses going around, building these microsatellites, that have one or two very specific functions, and do low orbiting.”
Rather than those companies having to build out their own antenna stations to communicate with their microsatellites, Vogels says that Amazon Base Station steps in to give small companies the ability to process satellite data and scale satellite operations via AWS.
Further into the future, Amazon is banking on using its growing quantum computing capabilities via its Braket service. Quantum computing promises computational capabilities far exceeding the reach of even today’s most powerful supercomputers by harnessing fundamental laws of quantum mechanics, or the theories that govern light and matter at atomic and subatomic scales.
“Quantum computing has come to a point where it is becoming practical,” Vogels said. “And what we see with our new service Braket is that larger enterprises, especially in the financial services space, and in the life sciences space, are starting to experiment, and try to figure out what quantum could mean for them.”
According to Vogels, in the next two or three years companies will begin to make major changes and advances in software and software development to exploit quantum computing and speed up their workflows.
Of course, Amazon isn’t the only company pursuing quantum computing. Cloud rivals Microsoft (MSFT), Google (GOOG, GOOGL), and IBM (IBM) are all pursuing their own take on quantum computing. If Amazon's own quantum computing capabilities do fully take off in the next few years, AWS's long-term prospects amid this competition look even brighter.
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