Category Archives: amazon

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The disruption of pay as you go hardware – and I do not mean leasing

Last week Amazon CEO Jeff Bezos spoke at a “Fireside Chat” with AWS (Amazon Web Services) chief Werner Vogels. It was an excellent and inspirational performance from Bezos.

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If there was a common theme, it was his belief in the merit of low margins, which of necessity keep a business efficient. Low margins are also disruptive to other businesses with high margins. But how low can margins go? In some cases, almost to nothing. Talking of Kindle Fire, Bezos remarked that “We don’t get paid when you buy the device. We get paid when you use the device.” It is the same pay as you go model as Amazon Web Services, he said, trying to remain vaguely on topic since this was an AWS event.

His point is that Amazon makes money when you buy goods or services via the device, not from profit on the device itself. He adds that this makes him comfortable, since at that point the device is also proving its value to the customer.

Google has the same business model with its Nexus range, which is why Google Nexus 7 and Amazon Kindle Fire are currently the best value 7” tablets out there. For Google, there is another spin on this: it makes the OS freely available to OEMs so that they also push Google’s adware OS out to the market. If you are not making much profit on the hardware, it makes no difference whether you or someone else sells it.

We do not have to believe that either Amazon or Google really makes nothing at all on the Kindle Fire or Nexus 7. Perhaps they make a slim margin. The point though: this is not primarily a profit centre.

This is disruptive because other vendors such as Apple, Microsoft, Nokia or RIM are trying to make money on hardware. So too are the Android OEMs, who have to be exceptionally smart and agile to avoid simply pushing out hardware at thin margins from which Google makes all the real money.

Google can lose too, when vendors like Amazon take Android and strip out the Google sales channels leaving only their own. This is difficult to pull off if you are not Amazon though, since it relies on having a viable alternative ecosystem in place.

But where does this leave Apple and Microsoft? Apple has its own services to sell, but it is primarily a high margin hardware company selling on quality of design and service. Apple is under pressure now; but Microsoft is hardest hit, since its OEMs have to pay the Windows tax and then sell hardware into the market alongside Android.

Ah, but Android is not a full OS like Windows or OSX. Maybe not … yet … but do not be deceived. Three things will blur this distinction to nothing:

1. The tablet OS category (including iOS) will become more powerful and the capability of apps will increase

2. An increasing proportion of your work will be done online and web applications are also fast improving

3. More people will question whether they need a “full OS” with all that implies in terms of maintenance hassles

Microsoft at least has seen this coming. It is embracing services, from Office 365 to Xbox Music, and selling its own tablet OS and tablet hardware. That is an uphill struggle though, as the mixed reaction to Windows 8 and Surface demonstrates.

Most of the above, I hasten to add, is not from Bezos but is my own comment. Watch the fireside chat yourself below.

Catching up with Amazon’s cloud services

I attended Amazon’s AWS (Amazon Web Services) Update in London. This was not a major news event; more a chance to catch up on what is new with Amazon’s cloud services, the dominant force in cloud computing infrastructure.

One thing that caught my interest is the speed which which Amazon is rolling out new features. The pattern seems to be that one or more significant features are rolled out each month. The session in London covered announcements since July 2012, with new stuff including:

  • DKIM signing for the Simple Email Service
  • High I/O EC2 (Elastic Compute Cloud) instances
  • Cross-origin resource sharing for S3 (Simple Storage Service), lets web apps interact directly with S3 content
  • Amazon Glacier service for archival storage
  • Binary data support in DynamoDB
  • SQL Server 2012 in RDS (Relational Database Service)
  • Provisioned IOPS (1,000 to 10,000 IOPS) storage for RDS
  • New instance types and price reductions – there are now seventeen types of VM, see the current range here.
  • General availability of Storage Gateway, which lets you attach cloud storage to your local network via iSCSI, with local caching for performance.
  • Ruby support in Elastic Beanstalk
  • Completely rewritten SDK for PHP using modern coding style
  • Consistent BatchGet for DynamoDB
  • Increased Provisioned IOPS for EBS (Elastic Block Storage) to a maximum of 2000 IOPS

What I want to highlight is not so much the features themselves as the pace of development, which is impressive.

There was considerable discussion of Provisioned IOPS which let you purchase fast data traffic between your application and your storage. This can have a dramatic impact. Netflix used it to reduce the instance count and eliminate Memcached caching from their application. Increasing performance is another route to scalability.

Reserved instances are interesting. If you reserve an instance for a period, rather than paying as you go, you save up to 63% but lose the benefit of down-sizing on demand. However Amazon has also created a marketplace where you can sell unused reserved instances. It is all smoke and mirrors for Amazon; a reserved instance is just a billing mechanism. It collects 12% of any resale though.

Elastic Beanstalk also got some attention. I have always thought of this primarily as an auto-scaling feature. However, the discussion focused more on ease of deployment. The two are related, since Elastic Beanstalk has to know how to automatically deploy your application in order to scale it automatically. It is “AWS for the lazy”, we were told.

Amazon is getting high demand for node.js on Elastic Beanstalk – not available yet but watch this space.

There was a session on CloudSearch which left me unexcited. This is in effect another type of cloud database designed for search with relevance ranking, field weighting and so on. However it is not trivial to implement; you will have to work out how to feed CloudSearch with data in its SDF format, matching what you want to search, and how to keep it up to date.

I would have liked to hear more about the DynamoDB NoSQL database manager which is proving a popular service.

If you want to track AWS as it evolves, I recommend following the official blog.

IE10 and Do Not Track: ineffective with Amazon ads

I set up Windows 8 on my desktop PC, accepting the default Do Not Track setting. This is still set:

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However I noticed Amazon ads served by Google/DoubleClick on a third-party site that reflected my recent activity on Amazon. I clicked the Privacy link on the ad (which links to Amazon rather than Google) and found this:

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Note that this is not an Amazon account setting. The wording makes it clear that it is a browser setting, which you have to make for every browser you use.

Because your selection above is managed through HTTP cookies, if you delete these cookies or use a different browser, you will have to make this same selection again.

Clearly it also defaults to “personalisation” despite IE 10 being set to request “Do not track”.

Kudos to Amazon for offering an opt-out; but no kudos for ignoring that I have already made a choice by sending a Do Not Track header.

Note there is no legal requirement to respect the Do Not Track header.

Microsoft SQL Azure versus SQL Server on Amazon AWS

Amazon RDS for Microsoft SQL Server offers cloud instances of SQL Server. Amazon’s offering even supports “License Mobility”, Microsoft jargon that lets volume licensing customers use an existing SQL Server license for an Amazon’s instance. But how does Amazon’s cloud SQL Server compare with Microsoft’s own offering, SQL Database running on Azure?

Peter Marriott has posted on the subject here (registration required). The key point: despite the obvious similarity (both are SQL Server), these two offerings are radically different. Amazon’s RDS SQL is more IaaS (infrastructure as a service) than PaaS (platform as a service). You choose an edition of SQL Server and rent one or more instances. The advantage is that you get full SQL Server, just like the on-premise editions but hosted by Amazon.

Microsoft’s Azure-hosted SQL on the other hand is more abstracted. You do not rent a SQL Server instance; you rent a database. Under the covers Microsoft provides multiple redundant copies of the data, and if traffic increases, it should scale automatically, though the database size is limited to 150GB. The downside is that not all features of SQL Server are available, as I discovered when migrating data.

Marriott adds that SQL Azure supports encrypted connections and has a more usable administration interface.

A further twist: you can also install SQL Server on an Azure Virtual Machine, which would get you something more like the Amazon approach though I suspect the cost will work out higher.

Amazon web service APIs: a kind of cloud standard?

I am at the Cloud Computing World Forum in London where one of the highlights was a keynote yesterday from Amazon CTO Werner Vogels. Amazon, oddly enough, does not have a stand here; yet the company dominates the IAAS (Infrastructure as a service) market and has moved beyond that into more PAAS (Platform as a service) type services.

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Vogels said that the reason for Amazon’s innovation in web services was its low margin business model. This was why, he said, none of the established enterprise software companies had been able to innovate in the same way.

He added that Amazon did not try to lock its customers in:

If this doesn’t work for you, you should be able to work away. You should be in charge, not the enterprise software company.

Sounds good; but Amazon has its own web services API and if you build on it there is an element of lock-in. Or is there? I was intrigued by a remark made by Huawei’s Head of Enterprise R&D John Roese at a recent cloud computing seminar:

We think there is an imperative in the industry to settle on standardised interfaces. There should be no more of this rubbish where people think they can differentiate based on proprietary interfaces in the cloud. A lot of suppliers are not very interested in this because they lose the stickiness of the solution, but we will not see massive cloud adoption without that portability. 

But what are these standardised interfaces? Roese said that Huawei uses Amazon APIs. For example, the Huawei Cloud Storage Engine:

The CSE boasts a high degree of openness. It supports S3-like interfaces and exposes the internal storage service enabler to 3rd party applications.

There is also Eucalyptus, open source software for private clouds that uses Amazon APIs. Is the Amazon web services API becoming a de-facto standard, and what does Amazon itself think about third parties adopting its API?

I asked Vogels, whose response was not encouraging for the likes of Huawei treating it as a standard. The question I put: is the adoption of Amazon’s API by third parties influencing his company in its maintenance and evolution of those APIs?

It is not influencing us. It is influencing them. Who is adopting our APIs? We licensed Eucalyptus. People ask us about standardisation. I’d rather focus on innovation. If others adopt our APIs, I don’t know, we rather focus on innovation.

The lack of interest in standardisation does undermine Vogels’ comments about the freedom of its customers to walk away, though lock-in is not so bad if your use of public cloud is primarily at the IAAS level (though you may be locked into the applications that run on it).

Another mitigating factor is that third parties can wrap cloud management APIs to make one cloud look like another, even if the underlying API is different. Flexiant, which offers cloud orchestration software, told me that it can do this successfully with, for example, Amazon’s API and that of Microsoft Azure. Perhaps, then, standardisation of cloud APIs matters less than it first appears.

What next for the Nook as Microsoft invests in Barnes & Noble’s digital business?

Today Microsoft and Barnes & Noble announced a partnership to sell eBooks, based on the existing Banes & Noble digital bookstore and eBook reader called the Nook.

The new subsidiary, referred to in this release as Newco, will bring together the digital and College businesses of Barnes & Noble. Microsoft will make a $300 million investment in Newco at a post-money valuation of $1.7 billion in exchange for an approximately 17.6% equity stake. Barnes & Noble will own approximately 82.4% of the new subsidiary, which will have an ongoing relationship with the company’s retail stores. Barnes & Noble has not yet decided on the name of Newco.

In addition, Barnes & Noble, which was in litigation with Microsoft over the Redmond company’s claim to royalties on Android, has agreed to a “royalty-bearing license” for the Nook eReader and tablets. Both the Nook Color and the Nook Tablet are based on Android.

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Another detail is that there will be a Nook application for Windows 8:

One of the first benefits for customers will be a NOOK application for Windows 8

though the release does not state whether or not this will be a Metro app. I would guess that it is, since otherwise it would not work on Windows RT (the ARM version of Windows), but nothing can be taken for granted.

Note that Barnes & Noble already has Nook apps for iPad, iPhone, Android, Windows and Mac, but not for Windows Phone.

It is an intriguing deal. Has Microsoft just taken a 17.6% stake in an Android company, or is there some plan in the works to base a future Nook on Windows?

As an attendee at developer conferences, I regularly see the Nook developer evangelists, and had a look at last year’s Adobe Max. Barnes & Noble claim that Nook apps sell relatively well, compared to apps on the official Google Play market, because Nook customers expect to pay for their content. The Nook is not an officially Google-blessed Android device, so has no access to the Play market.

If a future Nook is Windows-based, Barnes & Noble will have a tricky time explaining to developers why they will have to port their apps.

Overall this is a hard deal to interpret. Barnes & Noble was a thorn in Microsoft’s side with its resistance to Android royalties, a thorn which has now been removed, but what else does it signify? You would have thought there would have been a Nook app for Windows 8 anyway, unless it is a complete flop.

How Amazon Web Services dominate infrastructure as a service

During Mobile World Congress I met with some folk from Twilio, the cloud telephony company, who said something that interested me. Twilio uses Amazon Web Service (AWS) for its infrastructure and told me that essentially there is no choice, AWS is the only cloud provider which can scale on demand quickly and smoothly as required.

Today at QCon London I met a guy from another major cloud-based company, which is also built on Amazon, and I put the same point to him. Not only did he agree, he said that Amazon is increasing its lead over the competition. Amazon is less visible than some, he said, because of its approach to PR. It concentrates on marketing directly to developers rather than chasing press stories or running big advertising campaigns.

Amazon has also just reduced its prices.

This is mixed news for the industry. In general developers I speak to like working with AWS, and its scalability is a huge benefit when, for example, you are entering a new market. You can do so without having to invest in IT infrastructure.

On the other hand, stronger competition would be healthy. My contact said that he reckoned his company could move away from Amazon in 12 weeks or so if necessary, so it is not an absolute lock-in.

Amazon entices Android developers with $50 incentive

Amazon is offering Android developers $50 of AWS (Amazon Web Services) credit if they submit an app to the Amazon Android app store.

Although the announcement refers to apps that actually make use of AWS, this does not seem to be a pre-condition:

September 7 – November 15: Android developers who submit an app that is approved to the Amazon Appstore for Android through October 15 will receive a $50 promotional code towards the use of AWS products and services

The move ties in with reports of Amazon developing its own Android-based tablet/Kindle. Exactly what Amazon will offer is still under wraps.

Amazon is an interesting contender in the mobile wars because it has its own instant ecosystem – millions of customers who are already signed up with accounts and stored credit card details. Add in Kindle eBooks, the MP3 store, and the Amazon Instant Video Store for streaming video, and it amounts to a comprehensive content offering that approaches that of Apple.

The AWS element is also significant, and in this respect Amazon is ahead of Apple. Of course there is nothing to stop you using AWS with apps for iOS or other platforms, though there is synergy when it comes to payments.

The relationship with Google is interesting, in that Google controls Android but Amazon is not hooking into Google services or the official Android Marketplace. Amazon is showing no sign of developing its own search engine though, so Google will still get some benefit if Amazon devices are popular, provided Google remains the default for search.

Implications of Amazon’s cloud failure

Amazon is into day three of a major failure of its Elastic Compute Cloud at its North Virginia datacenter, and at the time of writing it is still not fully recovered.

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I am reminded of a prescient remark by Tony Lucas at Flexiant, a UK cloud provider, who told me a couple of years ago (with commendable honesty) that cloud failures will be rare, but when they occur will be on a grand scale.

It seems that it is hard to engineer around the possibility of cascading failure. I am not sure what happened in North Virginia, but Amazon says on its status page that:

A networking event early this morning triggered a large amount of re-mirroring of EBS volumes in US-EAST-1. This re-mirroring created a shortage of capacity in one of the US-EAST-1 Availability Zones, which impacted new EBS volume creation as well as the pace with which we could re-mirror and recover affected EBS volumes. Additionally, one of our internal control planes for EBS has become inundated such that it’s difficult to create new EBS volumes and EBS backed instances.

It sounds like an automated recovery system built into the compute cloud actually became the problem, as a large number of volumes tried to fix themselves at the same time.

This is not the first Amazon outage, but I believe it is the most severe; though it could have been worse and I have not heard that any data was lost. What are the implications?

Any computer system can fail. There will be a lot of companies reflecting on this though, both those directly affected and others, and realising that the cloud can be a single point of failure, despite the scale and expertise which a company like Amazon invests in high availability.

Is Amazon EC2 more or less likely to fail for an extended period than Salesforce.com? Or Microsoft Azure? Or Google App Engine, or Gmail, or IBM’s evolving SmartCloud? Clearly an excellent question; but I am not sure how we go about answering it other than by reviewing historical performance. I do not expect any of these companies to take advantage of Amazon’s problems to proclaim their own superior resiliency; they will all be worrying too much about the same thing happening on their platforms.

My guess is that the industry will get better at this, and that at some unspecified future moment the chance of one of these cloud platforms failing for three days will become exceedingly small – of course risk can never be eliminated, only reduced.

It seems that the risk is not exceedingly small on Amazon’s cloud today; and we should probably assume that the same applies to other providers.

That is something we have always known, so in one sense nothing has changed. This outage is a sharp reminder though; and planning for failure is a hidden cost of cloud computing that has now been brought into the light.

Five years of Amazon Web Services

Amazon introduced its Simple Storage Service in March 2006. S3 was not the first of the Amazon Web Services (AWS); they were originally developed for affiliates who needed programmatic access to the Amazon retail store in order to use its data on third-party web sites. That said, there is a profound difference between a web service for your own affiliates, and one for generic use. I consider S3 to mark the beginning of Amazon’s venture into cloud computing as a provider.

It is also something I have tracked closely since those early days. I quickly wrote a Delphi wrapper for S3; it did not set the open source world alight but did give me some hands-on experience of the API. I was also on the early beta for EC2.

Amazon now dominates the section of the cloud computing market which is its focus, thanks to keen pricing, steady improvements, and above all the fact that the services have mostly worked as advertised. I am not sure what its market share is, or even how to measure it, since cloud computing is a nebulous concept. This Wall Street Journal article from February 2011 gives Rackspace the number two slot but with only one third of Amazon’s cloud services turnover, and includes the memorable remark by William Fellows of the 451 Group, “In terms of market share Amazon is Coke and there isn’t yet a Pepsi.”

The open source Eucalyptus platform has paid Amazon a compliment by implementing its EC2 API:

Eucalyptus is a private cloud-computing platform that implements the Amazon specification for EC2, S3, and EBS. Eucalyptus conforms to both the syntax and the semantic definition of the Amazon API and tool suite, with few exceptions.

AWS is not just EC2 and S3. Other offerings include two varieties of cloud database, services for queuing, notification and email, and the impressive Elastic Beanstalk for automatically scaling your application on demand.

Should we worry about Amazon’s dominance in cloud computing? Possibly, especially as the barriers to entry are considerable. Another concern is that as more computing infrastructure becomes dependent on Amazon, the potential disruption if the service were to break increases. How many of Amazon’s AWS customers have a plan B for when EC2 fails? Amazon defuses anti-competitive concerns by continuing to offer commodity pricing.

Amazon has quietly changed the computing landscape though; and though this is a few weeks late the 5th birthday of its cloud services deserves a mention.