AWS Re:Invent Recap – Hybrid Cloud is Real. Even Amazon Says So.

The highlight of AWS Re:Invent is always the much anticipated keynote from CEO Andy Jassy. This year, over a three hour span, Jassy took us slide after slide through the dozens of new features AWS is rolling out. These were received by a mix of cheers and panic attacks from their competitors and hundreds of startups vying for a piece of the cloud and infrastructure market.

At $27B in Q3 2018 run rate revenue, representing 46% year over year growth, and holding a 51% market share, Amazon Web Services has maintained and defended its dominant position in the public cloud.  According to Gartner, the worldwide IaaS and PaaS revenues are projected to grow to $55B in 2018, with Amazon being the leader.

AWS has routinely evangelized the public cloud, touting customer stories such as Netflix and Spotify who are 100% on public cloud. However, the reality is that approximately two-thirds of enterprise workloads are still on-premise and the vast majority of core applications are still run on-premise. In fact it wasn’t until 2015 that Netflix announced the closing of their last data center. At Ascent, we are big fans of the cloud. Almost 100% of our investments are SaaS and on the cloud and there is indisputable data that more enterprises are moving to the cloud, for the flexibility, cost reduction, ease of management, etc. However, at what pace is migration to the cloud happening?

Not quickly enough, it turns out. Perhaps the biggests announcement from Andy Jassy’s keynote revealed AWS’ nod to hybrid by announcing an on-premise product in partnership with VMware: AWS Outposts. AWS is literally selling the same hardware they use in their own data centers, to their customers who aren’t ready to make the full jump to public cloud. There are two Outposts variations: one which uses the VMware control panel, and one which run’s AWS’ cloud services natively. The idea is for customers to have the same user experience regardless of where they choose to run their applications and workloads. In both cases, AWS will sell companies their hardware, install it, and even maintain and repair it. For a company that has been “all in” on cloud, this move represents a big surprising step by Amazon.

AWS Outposts shows that the company realizes that expecting enterprises to completely abandon the data center is unrealistic and, in same cases, impossible. Sometimes, it’s a matter of keeping core applications on-premise, workloads that require low latency, security considerations, or privacy or governance rules and regulations. Moreover, the reality is IT has been increasingly managing a diverse portfolio of products across multiple disparate environments.  The future is hybrid and multi-cloud, and Amazon believes that managing that in itself is a long standing enterprise market opportunity large enough to start selling hardware.

Turns out the hybrid cloud is real. Even Amazon says so.