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Considering that Twilio hosts with AWS, that will be a tough price war for Twilio to win.

by jonknee 10y ago

dforrestwilson 10y ago
Can we contrast the aggressive Amazon platform vs customer dynamic with other cloud providers? Why would a new company opt for Amazon at the risk of being copied and competed with as we're seeing with Netflix, Twilio, and numerous Amazon store vendors? Why not go with Google or Microsoft?
- eldavido 10y ago
  Think like a customer. Netflix has a lot of customers, IMO because they developed great recommendation IP, they have a large content library, and have invested heavily into customer acquisition and marketing to build a consumer brand. Netflix will use AWS infrastructure if it benefits their business and go elsewhere if it doesn't. The fact that the two companies compete in some ways is pretty much irrelevant to Netflix's (operational) decision of hosting provider.
- jonknee 10y ago
  Because it works? Apple still spends billions buying parts from Samsung, even while locked in a patent infringement lawsuit.
- shostack 10y ago
  I wonder if/how AWS data might be used to inform decisions Amazon makes about breaking into other markets.
eldavido 10y ago
Twilio's cost structure is probably dominated by SMS charges from telco operators and customer acquisition, not their AWS bill. So I doubt it, but feel free to cite data that shows I'm wrong. (I read their s-1 and I don't think it got into that granularity of cost accounting)
- jonknee 10y ago
  But they also spend a bundle with AWS... Amazon can reach the same pricing with the telcos, but will have lower infrastructure costs. Twilio would honestly be a good acquisition for AWS, but maybe Bezos feels like doing it himself.
  - eldavido 10y ago
    Isn't Twilio's gross margin like 50%? I think it's a market where winning is about customer acquisition and retention, not necessary cost-control, though I'll grant that could become more important over time.
biot 10y ago
The cost of CPU and bandwidth to process 160 byte messages is a rounding error compared to the fees from the mobile networks.
- jonknee 10y ago
  It is, but AWS is all about making money on rounding errors. How long before Amazon starts letting to place and receive calls?
  - biot 10y ago
    You said "considering that Twilio hosts with AWS" as if that's the competitive disadvantage they face vs. Amazon. However, their cost structure would be the same if they hosted on Azure, Google Cloud, Rackspace, or anywhere else. So yes, Amazon may compete on price but I'm not seeing how Twilio being on AWS factors into it given that they need to incur server hosting costs somewhere.

Considering that Twilio hosts with AWS, that will be a tough price war for Twilio to win.

by jonknee 10y ago

Considering that Twilio hosts with AWS, that will be a tough price war for Twilio to win.

Can we contrast the aggressive Amazon platform vs customer dynamic with other cloud providers? Why would a new company opt for Amazon at the risk of being copied and competed with as we're seeing with Netflix, Twilio, and numerous Amazon store vendors? Why not go with Google or Microsoft?

eldavido 10y ago
Think like a customer. Netflix has a lot of customers, IMO because they developed great recommendation IP, they have a large content library, and have invested heavily into customer acquisition and marketing to build a consumer brand. Netflix will use AWS infrastructure if it benefits their business and go elsewhere if it doesn't. The fact that the two companies compete in some ways is pretty much irrelevant to Netflix's (operational) decision of hosting provider.
jonknee 10y ago
Because it works? Apple still spends billions buying parts from Samsung, even while locked in a patent infringement lawsuit.
shostack 10y ago
I wonder if/how AWS data might be used to inform decisions Amazon makes about breaking into other markets.

eldavido 10y ago

Twilio's cost structure is probably dominated by SMS charges from telco operators and customer acquisition, not their AWS bill. So I doubt it, but feel free to cite data that shows I'm wrong. (I read their s-1 and I don't think it got into that granularity of cost accounting)

jonknee 10y ago
But they also spend a bundle with AWS... Amazon can reach the same pricing with the telcos, but will have lower infrastructure costs. Twilio would honestly be a good acquisition for AWS, but maybe Bezos feels like doing it himself.
- eldavido 10y ago
  Isn't Twilio's gross margin like 50%? I think it's a market where winning is about customer acquisition and retention, not necessary cost-control, though I'll grant that could become more important over time.

biot 10y ago

The cost of CPU and bandwidth to process 160 byte messages is a rounding error compared to the fees from the mobile networks.

jonknee 10y ago
It is, but AWS is all about making money on rounding errors. How long before Amazon starts letting to place and receive calls?
- biot 10y ago
  You said "considering that Twilio hosts with AWS" as if that's the competitive disadvantage they face vs. Amazon. However, their cost structure would be the same if they hosted on Azure, Google Cloud, Rackspace, or anywhere else. So yes, Amazon may compete on price but I'm not seeing how Twilio being on AWS factors into it given that they need to incur server hosting costs somewhere.