The cloud comes of age, sweeping away IT as we've known it

24 July 2016 - 02:00 By Arthur Goldstuck


This week's announcement by Microsoft that its commercial cloud services generated $12.1-billion (about R173-billion) in the last quarter marked the end of the beginning of the cloud computing revolution.

It comes off the back of Amazon declaring $10-billion in revenue from its cloud division, Amazon Web Services, for the first quarter of this year.It's not as if the cloud has been slowly creeping up on the information technology industry. More like mounting a massive invasion of its epicentre.The Amazon number represented 64% growth over the same period last year. That makes it the fastest-growing major IT company in the world.story_article_left1For a business division that is no more than 10 years old, these are astonishing numbers. They represent the end of the old way of selling computing."Old IT thrived on long-term contracts and upfront payments," said Werner Vogels, chief technical officer and vice-president of Amazon, during a visit to South Africa last week."As CTO of Amazon I was on the receiving end of that model: writing big cheques to data storage companies. Once I'd written the cheque, they didn't care much."We have a significantly different financial model. You pay for the capacity you consume, not the capacity for which you committed upfront. This makes it even more remarkable to get to $10-billion, because there is no longer that large upfront commitment from customers."This is precisely why customers are using more of these services. If they don't have to lock in capital expenditure at an early stage, they are able to be more flexible, scaling up and down as they need capacity."That's why cloud growth is so different from computer growth. We continue to reduce prices - they've just been cut for the 51st time in 10 years - yet still see this growth."At the beginning of this year, Amazon Web Services had data centres in 11 regions worldwide, and is adding five more this year, including India and South Korea. South Africa isn't part of the roadmap - yet."In the fullness of time we will have regions everywhere," said Vogels. "It's a matter of when, not if."The cornerstone was laid at the Amazon Development Centre in Cape Town, which built the Amazon Elastic Compute Cloud, known as EC2, a decade ago. The centre houses more than 1000 staff, and is still expanding.story_article_right2"We have openings for 300 engineers here, and I'm looking forward to filling those seats as soon as possible, because there's a lot of work to be done," he said. "We don't only need engineers working on EC2, but also on new products."Last year Amazon rolled out 700 new features and services, with a further 368 by the end of June this year. From support for analytics that drive business intelligence to hardcore technical services, these make businesses more agile and able to operate globally with minimal investment.The businesses include global names in disruption, such as Airbnb, but small South African start-ups are on the Amazon radar too. Vogels mentioned local music streaming services Nichestreem and Simfy Africa and financial services companies Entersekt and PayGate.Mix Telematics, he said, was an example of a South African company able to reach a global audience using the cloud.Clearly, for companies not yet using the cloud, it is also only a matter of "when".Goldstuck is the founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram @art2gee

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