
Amazon's cloud business is competing with its own customers - NicoJuicy
https://www.cnbc.com/2018/11/30/aws-is-competing-with-its-customers.html
======
cddotdotslash
The trend I've noticed is that AWS makes a lot of very half-baked services
that appear to compete with third-parties, but provide about 10% of the
features and usability. Maybe they're hoping that's enough for the bulk of
users (and maybe it is), but from what I've seen, if you want to do anything
serious, you still have to use a third-party.

Take CloudWatch for example. It's technically "competing" with Splunk,
Datadog, and other logging/metrics services. But the usability of CloudWatch
is beyond poor - it's slow, the UI is terrible, and has tons of limitations.
It provides just barely enough usability that hobbyist users can use it. But
most serious businesses will revert to Splunk or Sumo Logic or Datadog.

Another issue I have with AWS is that they simply provide too many ways to do
the same thing. I want to run a container. Should I use ElasticBeanstalk? ECS?
Fargate? EC2 with Docker? I've been using AWS for years, so I get the subtle
differences, but some users just want to click a button and be done with it,
which is where third-parties can excel.

~~~
fipple
This is not unique, it is the “integrated” vs “best of breed” offering. It’s
like the oldest business school IT case. Amazon isn’t trying to sell the best
anything, they’re selling one spot where you can get everything you need even
if some of it is crappy.

~~~
paulddraper
"Overwhelming mediocrity"

~~~
TeMPOraL
Software industry's evolution in a nutshell. New tools are this to old tools.
SaaS are this to desktop software.

------
amasad
That's why I think MongoDB's new license which prevents AWS etc from hosting
as a service without open sourcing makes sense
([https://news.ycombinator.com/item?id=18229452](https://news.ycombinator.com/item?id=18229452)).
Amazon barely contributes anything back to the community and is known for
destroying OSS businesses.

~~~
softwaredoug
I wonder with Amazon if we’re seeing a failure mode of Apache and BSD
licenses, and if the future OSS might trend back towards more aggressively
being copy left... or some place in between.

~~~
SquishyPanda23
I'm actually not sure how this is a failure mode of those licenses.

I thought the point of permissive licenses over copyleft licenses is that
you're explicitly granting companies the right to make money off your code
without giving anything back.

~~~
simonh
It's the difference between believing that what matters is user rights and
sharing code, and believing that what matters is the world containing more
cool stuff.

Tim O'Reilly has a story (which I'll probably butcher) where after publishing
the BSD manuals as books he was accused by someone at a conference of stealing
the author's work. One of the authors stood up and said something like
"Actually what Tim is doing is exactly what we want - spreading the material
as widely as possible and making it as useful as possible. We knew exactly
what we were doing choosing that license".

It's the same spirit in which MacOS being based on BSD is fine, even if not a
single line of code is shared back. The question isn't "What did Apple share
back to BSD programmers recently?", it's "Is the world a better place with
MacOS in it as something people can choose to use?".

The same applies to Amazon. It simply wouldn't have been possible to build
something like Amazon purely on proprietary code, running only proprietary
OSes and services. Even if they had, it would have been a lot less
interesting. I think it's pretty clear that the world is a better place with
services like AWS available. As long as they follow the licenses of the
software they use, there isn't a problem, but if some licensors disagree they
can always change their license.

------
talawahdotnet
I am personally much happier to see AWS implement managed versions of OSS like
Kubernetes and Kafka, than to only see them offer their proprietary versions
(Kinesis & ECS).

The fact that all of these services are based on OSS software is what will
help keep Amazon in check as they continue to grow and dominate, because at
the end of the day if AWS starts to turn into Oracle and get abusive with
their pricing/licensing then the customer has a lot more leverage to move to
another cloud or self host.

I am not holding my breath for some kind of government driven intervention,
nor have I heard an idea of how that would work that makes sense. I think OSS
is what is saving us here, and we should celebrate when a project becomes
popular enough for AWS to offer it.

Is it fair to the developers that they don't get compensated, nope, but isn't
part of the point of OSS to make sure that great solutions get reused and
widely deployed?

I think companies building great software can continue to make money servicing
it even with AWS in the picture, but I think if you want to make unicorn
returns you are going to have to move further up the stack.

Honestly, at some point I hope we are no longer even taking about low level
components like Kubernetes and Kafka and that we look back and laugh at the
fact that we used to have to license and get support for these things
individually. I do also hope that we manage to find a sustainable (if not
equitable) model to support the development of these tools.

All the clouds are built on top of the Linux kernel and nobody really expects
the kernel devs to get a cut of all those profits, but they seem to have a
sustainable model for development, I hope we can continue to figure out good
ways to do this for more and more OSS tools.

~~~
coredog64
The story I heard about Kinesis (and it could be a misunderstanding) is that
Amazon originally wanted to offer managed Kafka but they couldn’t get it
working with their infrastructure and started from scratch.

MSK makes sense now as Kafka has matured significantly, while Amazon has had
experience in porting OSS onto their infrastructure stack (Aurora, managed
ActiveMQ, EKS).

~~~
xmly
Kinesis is based on DynamoDB, so not from scratch...

~~~
tybit
Is there any public information available about this?

------
AndrewKemendo
There is nothing that prevents AWS from using it's own systems as business
intelligence for creating their own competitive products.

Think about it like "store brand" software. If people seem to be installing
docker on 40% of AWS instances, then evolving Amazon ECS to include an Amazon
branded Docker clone, effectively replacing Docker, is a no-brainer.

Seems like this is the way they are going. No need to acquire companies if you
can just build infrastructure or services natively that work more easily.

Terrifying times out there for starting a software company.

~~~
beginningguava
It should fix itself eventually, either companies will choose to use Google or
Microsoft rather than AWS or the government will smack AWS with monopoly laws.
The main concern there is that Bezos has become so entrenched in DC with the
washington post, DOD cloud contract, and new headquarters that it's hard to
tell if we can rely on the government to do anything

~~~
AndrewKemendo
Honestly I doubt it.

1\. If Amazon is providing a service that is as good or easier to implement
than others, people don't care enough about competition or open markets to
decide based on that.

2\. From the govt perspective, I'm on the front lines of the DoD cloud
discussions and I can tell you that even though we don't want a single
provider, and hopefully I can push hard to ensure we have multiple providers,
Amazon has the mindshare in the govt and growing.

------
boulos
Disclosure: I work on Google Cloud.

For what it's worth, I often recommend customers look to our partners (e.g.,
Elastic with their managed offering). The people who build the product will
know it best. Moreover, they would be way better suited to running say a
multi-cloud variant, or staying with you as you move between cloud providers.

There are still barriers though for third-parties on a cloud platform, some of
which we as providers can slowly chip away at:

\- Integration/Feel: You want to be in the console and feel like a natural
part of the platform. This is double-edged though, because holding all
partners to such a high bar (say a Google internal API review... ha!) is
unrealistic.

\- Support: Who do customers call? Their overall cloud provider or their
specific service provider? If the customer is having trouble with their
Elastic cluster, is it because we're having a GCE outage or did the customer
write a query-of-death? For the latter, our front-line support won't be much
help. [Edit: And you want to be able to still have a very fast "Hey! My stuff
is down!" path. I think technological things could make automatic handoff here
much better, but I believe it'll be "not great" for a while.]

\- Economics: most service providers are going to be smaller than our largest
customers. Those customers have usually signed up for multi-year commitments
with high volumes resulting in a discount. If your service pricing model is
"on-demand GCE pricing plus our service fee", you suddenly look over 2x as
expensive to their TCO folks (just from missing Committed Use, or RIs with
AWS). Unbundling the resources from the management fee would make this easier,
but I've not seen many service providers attempt it.

We owe you much better docs (start here [1]), but we're trying to get there on
at least some of these. All of the "human" factors though are still going to
be a challenge, no matter how much software gets written.

[1] [https://cloud.google.com/service-
infrastructure/docs/tenancy...](https://cloud.google.com/service-
infrastructure/docs/tenancy-units-tutorial)

------
softwaredoug
Amazon will probably go broad, not deep. And that can be (and is) leveraged by
the right companies.

The trick will be differentiating within that space. Take hosted search - AWS
Elasticsearch for example doesn’t necessarily prevent companies like Bonsai,
Elastic, or Searchstax from standing out for the right use cases. Most
importantly these companies can provide a lot of high end support and combine
with other industry focused products and services (like Elastic XPack) that
Amazon doesn’t provide for the niches these companies work within.

We probably need to assume Amazon will host X thing and work to find the
niches deeper in X that need to be served.

~~~
brunoborges
The challenge is to convince customers to pay premium for services/products
from i.e. Bonsai/Elastic/etc than to use a general purpose, darn cheap, Cloud-
based offering.

Amazon scales. Niche does not.

------
spaginal
I would imagine this should be a primary concern for a lot of companies
operating in Google, Microsofts, and Amazon's cloud.

You are dealing with companies that have the power and money to become your
main competitor overnight, and you don't know what kind of business
intelligence they are gaining from you being on their hardware, and if there
is espionage going on with your software and service. How honest are they
being?

Judging by the size, scope, behaviors, and attitudes of the companies, I think
it's turning into a risk to host on their platforms if you work in a space
they may be interested into getting into.

~~~
vemv
You don't need any espionage to implement and release the new Amazon Kafka
product. Kafka is an open source package after all.

Profiting from any marginal gain from such espionage would be deterred by the
huge reputational risk for AWS, were they caught.

~~~
hueving
You do need espionage to know how many of your customers are using Kafka on
their EC2 instances to make that product decision though.

------
mindcrime
Yeah, it's getting tricky as an AWS user. Some of the stuff we're building
will now be directly competing with Amazon as well. And they keep moving more
and more in the direction of competing with stuff people are building on their
platform.

That said, the name of the game is "Co-opetition"[1]. Everybody is
simultaneously competing and cooperating.

Going beyond that though, it does lead us to wonder at what point it would
make sense for us to move off of AWS and build everything on bare-metal, using
our own servers in a co-lo center, etc. Of course that takes a lot more up-
front $$$, and we wouldn't have the same economies of scale as Amazon, so...

Yeah, it's complicated.

[1]:
[https://en.wikipedia.org/wiki/Coopetition](https://en.wikipedia.org/wiki/Coopetition)

~~~
sharemywin
are there competitors to AWS that want to stay in just of cloud hosting?

~~~
thefounder
Yeah, traditional hosting companies such OVH...there was rackspace as well but
it's gone now.

~~~
kazen44
ovh and hertzner are also vastly undercutting amazon in the EU.

Amazon is crazy expensive. especially if you consider the far lower labour
costs in most of the EU.

------
thinkingkong
Its been this way since the beginning. In the first wave of cloud services
there were companies that built UIs to manage aws. Managed databases. PaaS
offerings, queues, load balancers, etc, etc.

If it didnt make so much sense to keep building these tools yourself you would
almost be able to suggest these other companies built expensive MVPs for AWS.

------
cerberusgr
I dont fully agree, as others noted by here, there are plenty of products that
compete with others and co-exist, for example terraform.

There are some things though that I bet their customers are asking badly, take
for example the Transit Gateway, one might thing that it is trying to put out
the vendors that users use for their Transit VPC, for example Cisco, Fortinet,
Palo alto to name a few, however, the Transit VPC is ugly, tough to maintain
and cant scale, yes, the vendors make big money from licences for Transit VPC,
but the need of a native service was there, the vendors will still sell
licences, just not for Transit VPC, they will be able to focus on other parts
that AWS dont prodive a lot.

------
darawk
Aka the "Apple app store" and "Trader Joes" model of competition: Build a
platform for other people to innovate on top of, then steal their best ideas
after you've validated that they work well on your own platform.

~~~
HillaryBriss
trying to see how this is the Trader Joe's model.

i thought what Trader Joe's did was find food makers that sell products at
other retailers (e.g. Naked Juice, sold for example at at Whole Foods) and
then negotiate a deal _with that same food maker_ to supply _that same
product_ to TJ's under the store label and at a lower price.

if I'm not mistaken, TJ's also develops its own product concepts (e.g. Thai
Chili Cashew Nuts or their Winter blend coffee) in conjunction with some
outside food makers and sells those in its TJ's stores too.

but, I'd be interested in finding some examples of where TJ's basically ripped
off one of their own supplier's ideas and had it made by someone else for
their store label. interesting stuff!

~~~
darawk
Hmm I was under the impression that they were ripping off those companies, but
you could certainly be right. I just saw the pattern of (for example) Snap Pea
crisps under a non-TJ brand get popular at TJ's, then TJ's labeled version
comes out and the other one disappears.

~~~
HillaryBriss
You could be right too. I'm not sure.

Trader Joe's is very secretive about who supplies its products. When I google
for something like "Who makes Trader Joe's $product" I find various articles
that _seem like_ they've actually uncovered suppliers in certain cases, and I
think those suppliers are pretty willing to sell a version of their existing
products at TJs for lower prices. But I certainly don't know the whole story.

One other thing I notice about TJs is that it does not carry a "full" product
line like a normal grocery store. TJ's often seems to cherry pick or negotiate
relatively good deals from outside food suppliers where they can. And if they
can't do that, in many cases, they just don't offer that product at all.
Still, they offer a wide enough product line to keep the customers flowing in.

[http://www.time.com/money/4894722/who-makes-trader-joes-
prod...](http://www.time.com/money/4894722/who-makes-trader-joes-products/)

[https://www.eater.com/2017/8/9/16099028/trader-joes-
products](https://www.eater.com/2017/8/9/16099028/trader-joes-products)

------
pbiggar
This is absolutely correct, they have done for a long time. They look at what
their customers build, see what grows a lot, and then build (often a shitty
version) themselves. They don't even pretend to do otherwise, and everybody in
the space knows it.

I was chatting to the CEO of a cloud product who went to reinvent and was
relieved to find out that Amazon had not launched a competing product. But we
both know it's a "when, not if" situation.

Part of the reason my new startup is on GCP. I don't want to AWS to have any
of our internal growth numbers.

------
scarface74
On the hand, AWS’s largest customer is Netflix. Amazon’s Prime Video is a
direct competitor.

Reposting an earlier link.

[http://scripting.com/stories/2007/04/04/coexistingWithPlatfo...](http://scripting.com/stories/2007/04/04/coexistingWithPlatformVend.html)

 _Sometimes developers choose a niche that’s either directly in the path of
the vendor, or even worse, on the roadmap of the vendor. In those cases, they
don’t really deserve our sympathy.”_

------
bryanrasmussen
I remember reading, probably about 10 years ago, something by I think Tim Bray
where he argued (I will have to paraphrase as I cannot find it anymore) that
developing applications that would be beneficial to all users of a platform on
that platform was a waste of time because it was to the advantage of the
platform itself to replicate the functionality once it saw how well it was
doing in the market.

Therefore if you do not want to compete with the same platform on which you've
based your solution you should make solutions that are niche specific - I
believe the example was a Apple and a dentistry service, because no matter how
much revenue your dentistry service made Apple would not go and copy it
because it had nothing to do with their business.

------
xmly
AWS is dominant and doing pretty well in the IaaS space, but lack of enough
good quality middlewares and enterprise software comparing with its
competitors, Azure and Oracle.

Maybe this claim is not fair for DynamoDB, Kinesis, Lambda and etc. But these
are just managed service. Customers could not get a binary to play around on
their own server. So I could not call them software or middleware.

So their strategy is simply making the most popular software running on IaaS
as a managed service, like managed Hadoop, Spark, K8S and now Kafka...

From a customer's perspective, it is pretty good since managed service just
works without hassles to manage servers.

------
actuator
While a lot of these offerings are subpar compared to their competitors. I
think one big advantage AWS has it that I don't have to talk to a sales team
to get something working. Like, go to Confluent's site. The business plan is
request a quote; I am not a fan of this model at all, why not keep things self
serve and pricing open. This makes your bootstrap time significantly longer.

Also, with AWS's offerings you get better management with security groups etc.

------
swiftcoder
This surprises anyone? Amazon retail has been competing with it's own
customers (mostly in the form of Amazon Basics) for years now...

------
smadge
Amazon is also using their consumer goods sales data of their merchants to
determine what products they should themselves profitably create and sell. For
instance Amazon began directly selling Amazon branded DisplayPort to HDMI
adapters after they determined they could profitably undercut the merchants on
their platform. Unfortunately I can’t dig up the link.

------
Aloha
Coopretition is nothing new - look at every utility, telecom, cableco, and
others - its a normal way of existing when markets and technologies are
heavily interlinked.

------
ryanmarsh
This just in: Ditch digging business, which got into the shovel business, is
also digging graves potentially competing with its shovel customers...

------
valamdoran
Have you tried MyAirBridge? I find it to be the best provider for online data
storage and sata sharing. Super reliable and safe

------
halis
It's not just AWS that competes with its customers, it's Amazon in general.

------
skywhopper
A few thoughts. 1) This is nothing surprising. People who build businesses
based largely around filling in gaps in AWS's managed services hopefully
expect and plan on AWS to attempt to fill that gap if that niche truly is
profitable.

2) AWS is going to build what its customers ask for. I work for a relatively
big consumer of AWS services, and we have a great relationship with our
customer support team, who connect us to the engineering teams building the
tools we use, and without fail down to the team, they are always very
interested in how they can better serve our needs and build products we want
to use. And if they hear "Kinesis is fine for some things, but we really want
to also do Kafka" from enough people, they will build a Kafka managed service,
just like they built ElasticSearch service, a Redis service, an RDS. And why
shouldn't they?

3) For customers, AWS's cost model is far better than most managed cloud
services. I don't know anything about Confluent's managed Kafka offering, but
having everything metered in tiny increments is a huge reduction in the
barrier to entry. If we want to build on a managed Kafka platform, but we want
to start slow and grow as we need, it's so much better to be able to just spin
up a tiny version to try things out, tear it down, take a break for other
priorities, then come back with more confidence and more experience and
iterate into building something real. Whereas too many cloud services require
a huge lock-in agreement up front before you can get any support, or often any
service.

And it's not like the lock-in is necessary. These companies could be
integrating their services to allow potential customers to leverage their AWS
infrastructure. There's no reason these third parties can't use IAM
credentials for authentication, and publish their services to customers over
PrivateLink, a tool AWS built for explicitly this sort of purpose--to enable
cloud providers to provide tight integrations with their shared customer base.

4) In terms of product quality, I don't think Confluent et al have anything to
be worried about. AWS "competes" with Dropbox, technically, but is WorkDocs
really serious competition? AWS's managed services have their place, but you
can't use RDS to replace the flexibility and scale you can achieve by running
PostgreSQL yourself. Their managed ElasticSearch and Redis products are okay,
but ultimately very rigid, and nonsensical to use beyond mid-range scale.
Their managed k8s service is something of a joke at this point (though I'm
sure it will get better). If Confluent is truly offering a strong managed
Kafka product, they will be just fine.

5) In fact, I suspect Confluent will get a lot more customers as a result of
this announcement, as management at hundreds of mid-sized companies will now
be convinced thanks to the AWS marketing that this Kafka thing their engineers
have been begging for for years must be really key now, but they'll figure out
how the AWS version doesn't quite live up and will end up being really
expensive to scale to their company's needs. Then they'll look a little deeper
and find Confluent. So I hope their marketing and sales teams are ready for
the influx. It's coming.

~~~
xmly
Confluent would be fine for sure... Usually, the open source projects would
have close-sourced "enterprise feature" to make money.

------
aviv
This is an ongoing trend. Same thing is happening right now with Twilio with
their Flex offering competing with longtime customers such as Talkdesk.

------
gaius
AWS’s managed FTP service too

~~~
syntheticcdo
In all honestly though, "SFTP-as-as-service" doesn't sound like a very sexy or
sustainable business model.

~~~
gaius
Sure, not “sexy” enough for the HN crowd but it sucks to be these guys
[https://hostedftp.com](https://hostedftp.com) since
[https://aws.amazon.com/sftp/](https://aws.amazon.com/sftp/) was announced

------
polskibus
This is why public cloud companies should be more regulated like telephony
companies are, ie like utilities. They give you broadband but not necessarily
try to sell you 15 kinds of database engines, or trying to build the same
things other businesses try to build using their lines.

~~~
scarface74
It kills me that a website full of well paid people in IT who all benefit from
the free market always cry for regulation.

I guess you don’t realize how many people in middle America would love to “tax
the rich” and if you’re making six figures “they” consider you rich.

~~~
mcguire
As an aside, if you make six figures, you are rich.

~~~
bitrrrate
Agreed. Plus many six figure salaries are attached to equal or greater amounts
of equity, 401K match and typically low cost health insurance. So while it’s
not jet-set wealth it is more than enough to have a very comfortable life with
few things out of reach for you.

