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BLOG: The proof is in: Amazon fully controls the cloud

David Linthicum | July 22, 2013
With its huge price reductions, Amazon Web Services not only leads the market, but controls it as well

Amazon Web Services (AWS) recently cut prices for its dedicated instances, the basis for its Virtual Private Cloud offering. If you've been keeping track, this is its 37th price reduction.

The day AWS announced the news, the price of Rackspace's stock dropped as well. The smaller providers competing with AWS got one more tough call to make to their investors: when to droptheir prices. (Rackspace did so on Wednesday.) Finally, Hewlett-Packard, IBM, Microsoft, and the other big guys also have to lower their quotes to be competitive with AWS.

There is nothing illegal or immoral about this. For AWS, it's just good business. It has great goods, and enterprises have been seeking lower cloud prices, so AWS is removing that issue to enable more adoption of cloud computing. Win-win, right?

The fact is AWS is slowly but surely taking control of the cloud computing market, moving from defining the market to dominating it. This means that AWS is considered the bellwether for service, support, and pricing, and every other provider follows along, hoping to stay relevant.

We all should be concerned that a single company has such a great degree of control over a market, especially one that's still forming. As we saw with Microsoft in the desktop operating system market in the 1990s, such control has both good and bad aspects. The good: You have a single technology provider that defines the market for you, so you don't have to bet on who will win. The bad: That already-a-winner controls the market, and it can get lazy or stupid, hurting everyone.

I suspect AWS won't give up its de facto control anytime soon — nor should it. After all, the market chose the leader. But we have to remember we'll want other providers around should AWS ever go off track.

 

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