Silver Lining in the Cloud

A standing room only crowd approaching 400 crammed the auditorium of MIT’s silliest looking building last night for the Innovation Series program on Cloud Computing featuring Amazon’s Adam Selipsky, VP Product Management and Developer Relations, Amazon Web Services.

The full title of the event was “Sunny Days Ahead for the Cloud Environment: What’s Real for You,” and Amazon certainly appears to have found the silver lining in the “cloud ecosystem.”

Rather than a standard sales presentation, wherein the speaker provides a self serving definition of cloud computing, to which his products compare favorably, Adam Selipsky very credibly built his case from the bottom up.

At Amazon, they felt they were very good at developing loosely coupled systems and applications, using low-cost hardware, and were clearly very experienced at eCommerce applications. Building on that base, they set the following design principles for their cloud offering:

· Reliable
· Elastic
· Low-Latency
· Secure
· Easy-to-Use
· Pay-as-you-Go

Adam cited the two major advantages the Amazon cloud offers are speed of development and low cost. Speed of development comes because Amazon provides self-service interfaces to their modules that are both simple and intuitive. As for cost and pricing, Adam points out that buying services rather than hardware allows a young company to turn potential capital expenditure into variable expenditure. And pay-as-you-go allows users to start small, confident that capacity will be there when needed.

Even today, Adam feels that his cloud can provide capacity, such as disk storage, at very favorable rates compared to the industry at large. From what I have seen, I agree. But to continue to provide competitively low prices, Amazon will have to become a low cost provider of cloud services and capacity.

I recall once seeing a framework, based on Michal Porter’s writings on competitive advantage, mapping the growth of a company through four stages:

· Technology Leader
· Market Leadership
· Financial Leader
· Low Cost Producer

Were I a financial analyst, I would wonder if Amazon can truly become and maintain a position of low cost producer. As an entrepreneur, I worry that the low cost producer is seldom much of an innovator. But perhaps the Amazon cloud and its 540,000 developer accounts is an innovation engine not seen before in industry. And the developer number grows by 50,000 every quarter.
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Local companies, speakers, and panelists included:

Chair: Sim Simeonov, Polaris Venture Partners
Fumi Matsumota, CTO, Allurent
Spike Washburn, CEO, Stax Networks
Frank Gillett, VP, Forrester Research
Roman Stanek, CEO, GoodData
Richard Reiner, CEO, Enomaly
Josh Fraser, VP, RightScale