If the future of AWS seems hard to parse, it’s because we’re still in the first couple of innings of cloud transformation. It may seem like we’ve been at this forever, but it’s really not been long since businesses have embraced the full potential of the cloud.
As they do, AWS wants to acquire as many of them as possible.
Amazon wants to encourage enterprises and public sector entities to pick its lane. To that end, AWS Direct Connect is adding hosted connection capacities over 500 Mbps — more than double the previous high of 200 Mbps.
This change, and a few others AWS is using to make its products more enticing, show a clear path forward for Amazon, one where it controls the market, and ultimately has the power to set the rules.
What AWS is changing to prepare for future growth
Giving select AWS Direct Connect Partners the ability to offer higher capacity hosted connectivity gives Amazon a way to draw in net new customers and get existing customers to use Direct Connect.
While the new business is great for Amazon, the real value comes over time:
Direct network connectivity to AWS makes the service sticky and harder to move from.
As competition from Microsoft and Google continues to heat up, locking in their biggest and most profitable customers is hugely important for Amazon’s future.
The time to build market share is now.
What Direct Connect pricing reveals about the future of AWS
The price, in this case, is almost beside the point. AWS Direct Connect hosted connectivity is already a great deal in the grand scheme of things. At present, a 200 MB hosted Direct Connect port costs $.08/hour from AWS. Most customers only need one or two of these connections. Now that price is dropping by one-third as Amazon adds 500 Mbps connections.
That money is easily made up, however. If having this connection in place allows customers to quickly move data and workloads to AWS, partner providers will make up for the Direct Connect price cut by selling other proprietary services.
What cloud and AWS trends are driving these changes
Many customers have dabbled in or are running production workloads in AWS. Some have even done it at scale. Now that the model is appealing and has proven to be viable, CIOs and their teams are looking for ways to strategically institutionalize services like AWS.
We focus heavily on these topics with our partners every day because they resonate. Executives have real concerns about how to make cloud transformation happen in a logical and sustainable way. It needs to align with their businesses’ standards and best practices.
If adding options to the way network connectivity is delivered and dropping price to a point where it isn’t profitable wins AWS a few more customers, then it makes good business sense.