3 ms·

TL;DR: The OP says Amazon's key advantage over all competitors is that the company's internal operations -- from server provisioning to database storage to inve

by cs702 10y ago

TL;DR: The OP says Amazon's key advantage over all competitors is that the company's internal operations -- from server provisioning to database storage to inventory management to fulfillment to call-centers -- are also sold to external users as services, forced by competition to remain highly competitive on quality, features, and cost efficiency. No other company has made its entire infrastructure available to the world as competitive services in the same way. It's a compelling point.

kpil 10y ago
It strikes me as a rather naïve analysis. Amazon are ruthless entrepreneurs, making every deal they can. If someone else opened up their internal services, nothing special will happen. Making your distrubutors fill your warehouses without paying them, since you have relabled the business relationship and adjusted the margins somewhat, and getting away with it because you more or less own the market - that's the sort of deals you need to make.
fragmede 10y ago
It's compelling, but the switching costs away from AWS are quite high, aka good ole' vendor lock-in. I'd love some new EC2 instance types that don't force me to use EBS for root, but the switching cost away from EC2 is so high that, sigh, whatever. If there were a drop in replacement for EC2 that didn't force me to use EBS for root, I'd switch in a heartbeat, but because of vendor lock-in, EC2 doesn't have to compete on quality, features, nor cost. It's simply because switching is (currently) too expensive. This is a feature that I, a customer, wants; the reason I want this is besides the point. To borrow from the auto industry, you can have use root, as long as it's EBS. Pretending Amazon doesn't use vendor lock-in to it's own advantage like every other company, and thinking that it really competes on quality, features and cost ignores the huge inertia of saying on what works. Private, back-room, "don't tell anyone else I gave you that good of a price"-type enterprise sales tactics for "at-scale" pricing don't engender trust either. Great for business; not for encouraging competition.
- dflock 10y ago
  It's only lock-in of you've tied yourself to AWS only features. If you just use EC2 as VMs, then switching is pretty easy.
  - solatic 10y ago
    Yeah but few people do that because building massive infrastructure on top of EC2 instead of using Amazon's managed alternatives is a great way to lose money, not just on the AWS bill itself but also on needless additional work for your architects. Defeating vendor lock-in requires the development of sound cloud-resource primitives, and probably some regulation on part of government to not pay egress costs when switching to a competitor (since the high cost of moving your data to another cloud is anti-competitive). But nobody has come up with decent primitives because, you know, if AmaGooSoft don't need multi-cloud architectures for high availability, then why do you think you do? And government won't step in because none of the regulators understand how any of this works.
clairity 10y ago
this is the kind of stuff you learn in business school, but bezos has the resources and the wherewithal to execute on it. verticalization is tantalizing for the promise that you can (1) capture existing value surplus (profit) and (2) consolidate services to reduce costs further. this gives you more operational margin to work with. but as the author says, often stagnation and complacency swallow those savings over time. so then, rather than a value chain service being locked into a single customer, amazon makes internal services compete externally, and prove their value financially as well as operationally. not only that, but those services must keep pace with industry innovations to remain competitive over time. this reminds me of the case of the chinese refrigerator company haier remaking itself into a global consumer electronics brand in part by implementing an internal market value chain mechanism to ensure a similar competitive instinct. each step in the value chain (down to the person) was evaluated for the value they produced and rewarded accordingly. people derive more satisfaction and work harder in a more competitive environment, although you can go overboard and end up creating a cut-throat one instead. as always, balance is key.
AceJohnny2 10y ago
So, what Steve Yegge was saying in 2011? https://plus.google.com/+RipRowan/posts/eVeouesvaVX https://plus.google.com/+RipRowan/posts/eVeouesvaVX People still haven't gotten the message? (edit: oops, it's even linked in the post)

by cs702 10y ago

kpil 10y ago

It strikes me as a rather naïve analysis. Amazon are ruthless entrepreneurs, making every deal they can. If someone else opened up their internal services, nothing special will happen. Making your distrubutors fill your warehouses without paying them, since you have relabled the business relationship and adjusted the margins somewhat, and getting away with it because you more or less own the market - that's the sort of deals you need to make.

fragmede 10y ago

It's compelling, but the switching costs away from AWS are quite high, aka good ole' vendor lock-in. I'd love some new EC2 instance types that don't force me to use EBS for root, but the switching cost away from EC2 is so high that, sigh, whatever. If there were a drop in replacement for EC2 that didn't force me to use EBS for root, I'd switch in a heartbeat, but because of vendor lock-in, EC2 doesn't have to compete on quality, features, nor cost. It's simply because switching is (currently) too expensive. This is a feature that I, a customer, wants; the reason I want this is besides the point. To borrow from the auto industry, you can have use root, as long as it's EBS. Pretending Amazon doesn't use vendor lock-in to it's own advantage like every other company, and thinking that it really competes on quality, features and cost ignores the huge inertia of saying on what works. Private, back-room, "don't tell anyone else I gave you that good of a price"-type enterprise sales tactics for "at-scale" pricing don't engender trust either. Great for business; not for encouraging competition.

dflock 10y ago
It's only lock-in of you've tied yourself to AWS only features. If you just use EC2 as VMs, then switching is pretty easy.
- solatic 10y ago
  Yeah but few people do that because building massive infrastructure on top of EC2 instead of using Amazon's managed alternatives is a great way to lose money, not just on the AWS bill itself but also on needless additional work for your architects. Defeating vendor lock-in requires the development of sound cloud-resource primitives, and probably some regulation on part of government to not pay egress costs when switching to a competitor (since the high cost of moving your data to another cloud is anti-competitive). But nobody has come up with decent primitives because, you know, if AmaGooSoft don't need multi-cloud architectures for high availability, then why do you think you do? And government won't step in because none of the regulators understand how any of this works.

clairity 10y ago

this is the kind of stuff you learn in business school, but bezos has the resources and the wherewithal to execute on it. verticalization is tantalizing for the promise that you can (1) capture existing value surplus (profit) and (2) consolidate services to reduce costs further. this gives you more operational margin to work with. but as the author says, often stagnation and complacency swallow those savings over time. so then, rather than a value chain service being locked into a single customer, amazon makes internal services compete externally, and prove their value financially as well as operationally. not only that, but those services must keep pace with industry innovations to remain competitive over time. this reminds me of the case of the chinese refrigerator company haier remaking itself into a global consumer electronics brand in part by implementing an internal market value chain mechanism to ensure a similar competitive instinct. each step in the value chain (down to the person) was evaluated for the value they produced and rewarded accordingly. people derive more satisfaction and work harder in a more competitive environment, although you can go overboard and end up creating a cut-throat one instead. as always, balance is key.

AceJohnny2 10y ago

So, what Steve Yegge was saying in 2011? https://plus.google.com/+RipRowan/posts/eVeouesvaVX https://plus.google.com/+RipRowan/posts/eVeouesvaVX People still haven't gotten the message? (edit: oops, it's even linked in the post)