What is AWS cloud computing?

Put simply, AWS is the undisputed market leader in cloud computing today, and even though there are a few worthy competitors, it doesn't seem like anyone will push them off the podium for a while. Why is this, and how can we be sure that they will remain a top player for years to come? Because this pattern has occurred in the history of the technology industry repeatedly. Geoffrey A. Moore, Paul Thompson, and Tom Kippola explained this pattern best a long time ago in their book The Gorilla Game: Picking Winners in High Technology.

Some important concepts covered in their book are listed here:

• There are two kinds of technology markets: Gorilla Games and Royalty Markets. In a Gorilla Game, the players are dubbed gorillas and chimps. In a Royalty Market, the participants are kings, princes, and serfs.
• Gorilla Games exist because the market leaders possess proprietary technology that makes it difficult for competitors to compete. This proprietary technology creates a moat that can be difficult to overcome.
• In Royalty Markets, the technology has been commoditized and standardized. In a Royalty Market, it's difficult to become a leader and it's easy to fall off the number one position.
• The more proprietary features a gorilla creates in their product and the bigger the moat they establish, the more difficult and expensive it becomes to switch to a competitor and the stronger the gorilla becomes.
• This creates a virtuous cycle for the market leader or gorilla. The market leader's product or service becomes highly desirable, which means that they can charge more for it and sell more of it. They can then reinvest that profit to make the product or service even better.
• Conversely, a vicious cycle is created for second-tier competitors or chimps. Their product or service is not as desirable, so even if they charge as much money as the market leader, because they don't have as many sales, their research and development budget will not be as large as the market leader.
• The focus of this book is on technology, but if you are interested in investing in technology companies, the best time to invest in a gorilla is when the market is about to enter a period of hypergrowth. At this point, the gorilla might not be fully determined and it's best to invest in gorilla candidates and sell stock as it becomes obvious that they won't be a gorilla and reinvest the proceeds of that sale into the emerging gorilla.
• Once a gorilla is established, most often, the way that a gorilla is vanquished is by a complete change in the game, where a new disruptive technology creates a brand new game.

To get a better understanding, let look at an example of a Royalty Market and an example of a Gorilla Game.

Personal computers and laptops – Back in the early 1980s when PCs burst onto the scene, many players emerged that sold personal computers, such as these:

• Dell
• Gateway
• IBM
• Hewlett Packard

I don't know about you, but whenever I buy a computer, I go to the store, see which computer is the cheapest and has the features I want, and pull the trigger regardless of the brand. This is the perfect example of a Royalty Market. It is difficult to differentiate yourself and stand out and there is little to no brand loyalty among consumers.

Personal computer operating systems – Whenever I buy a new computer, I make sure of one thing: that the computer comes with Microsoft Windows, the undisputed market leader in the space. Yes, the Macintosh operating system has been around for a long time, Linux has been around for a while making some noise, and the Google Chrome operating system is making some inroads, especially in the educational market. But ever since it was launched in November 1985, Microsoft Windows has kept the lion's share of the market (or should we say the gorilla's share?).

Of course, this is a subjective opinion, but I believe we are witnessing the biggest Gorilla Game in the history of computing with the advent of cloud computing. This is the mother of all competitive wars. Cloud vendors are not only competing to provide basic services, such as compute and storage, but are continuing to build more services on top of these core services to lock in their customers further and further. Vendor lock-in is not necessarily a bad thing. Lock-in, after all, is a type of golden handcuffs. Customers stay because they like the services they are being offered. But customers also realize that as they use more and more services, it becomes more and more expensive to transfer their applications and workloads to an alternate cloud provider.

Not all cloud services are highly intertwined with their cloud ecosystems. Take these scenarios, for example:

• Your firm may be using AWS services for many purposes, but it may be using WebEx, Microsoft Teams, Zoom, or Slack for its video conference needs instead of Amazon Chime. These services have little dependency on other underlying core infrastructure cloud services.
• You may be using Amazon SageMaker for artificial intelligence and machine learning projects, but you may be using the TensorFlow package in SageMaker as your development kernel, even though TensorFlow is maintained by Google.
• If you are using Amazon RDS and you choose MySQL as your database engine, you should not have too much trouble porting your data and schemas over to another cloud provider that also supports MySQL, if you decide to switch over.

With some other services, it will be a lot more difficult to switch. Here are some examples:

• Amazon DynamoDB is a NoSQL proprietary database only offered by AWS. If you want to switch over to another NoSQL database, porting it may not be a simple exercise.
• If you are using CloudFormation to define and create your infrastructure, it will be difficult, if not impossible, to use your CloudFormation templates to create infrastructure in other cloud provider environments. If the portability of your infrastructure scripts is important to you and you are planning on switching cloud providers, Terraform by HashiCorp may be a better alternative since Terraform is cloud-agnostic.
• If you have a graph database requirement and you decide to use Amazon Neptune (which is the native Amazon graph database offering), you may have a difficult time porting out of Amazon Neptune, since the development language and format can be quite dissimilar if you decide to use another graph database solution such as Neo4j or TigerGraph.

As far as we have come in the last 15 years with cloud technologies, I believe, and I think vendors realize, that these are the beginning innings, and locking customers in right now while they are still deciding who their vendor is going to be will be a lot easier than trying to do so after they pick a competitor.

A good example of one of those make-or-break decisions is the awarding of the Joint Enterprise Defense Infrastructure (JEDI) cloud computing contract by the Pentagon. JEDI is a $10 billion 10-year contract. As big as that dollar figure is, even more important is the fact that it would be nearly impossible for the Pentagon to switch to another vendor once the 10-year contract is up.

For that reason, even though Microsoft was initially awarded the contract, Amazon has sued the US government to potentially get them to change their mind and use AWS instead.

Let's delve a little deeper into how influential AWS currently is and how influential it has the potential to become.