While occasional service disruptions are an immutable reality in the hyperscaler world, this week’s massive AWS outage could have a devastating impact on the Amazon unit because AWS is already falling dangerously far behind its competitors in growth rates as well as AI product strategy and execution.
Without trying to minimize the scale of the AWS disruption — and you can see some of the gory details below from a tomsguide.com report to which I’ve linked — history shows that the public clouds operated by Microsoft, Google Cloud, and Oracle have all suffered outages of one form or another over the past few years.
Despite the many hundreds of billions — and now well into the trillions — of dollars those four companies have invested in world-class cloud infrastructure, perfection is simply not a component of the human condition.
However, for AWS, this large-scale incident will be particularly troublesome for the following reasons:
- The scope and duration of the incident. The outage affected a huge range of companies and institutions, ultimately impacting millions of people. Many of those affected are web-native companies whose operations were brought to a halt by the AWS outage.
- Terrible timing. While there’s certainly no “good” time for such a disaster, this one occurred right at the beginning of the holiday season, when online sales, operations, and planning have become indispensable for big chunks of the global economy. Big-company executives who’ve depended on AWS to run perfectly as those businesses ring up outsized percentages of their annual revenue during the holiday season will certainly be wondering if they should look elsewhere.
- Even before the outage, AWS was falling behind. While AWS posted Q2 revenue of $30.9 billion and a growth rate of 17.5% — numbers that, in a vacuum, would be extraordinarily good — AWS does not exist in a vacuum but instead competes with some of the world’s biggest and most innovative companies on Earth: Microsoft, Google, and Oracle. And as I have covered in detail over the past year or so, AWS is growing much more slowly than the cloud businesses for those other hyperscalers–for the full story on that, please see “As AWS Stumbles Versus Microsoft, Google Cloud, and Oracle, Andy Jassy Offers Lame Spin.” In its most recent quarters, Microsoft grew 27% on a much larger revenue base than that of AWS; Google Cloud grew 32% and has outgrown AWS for the past 10 quarters; and Oracle’s cloud revenue grew 27% on a much smaller revenue base.
- AWS is dead last in pipeline growth. The repercussions of the outage will surely influence future buying decisions among businesses evaluating the hyperscalers, and the negative perception will surely not help AWS, which is already dead last in RPO/backlog growth. And as with revenue-growth comparisons shown above, the numbers are not even close — AWS is far behind. From my recent analysis headlined “Oracle Blows Past Microsoft in RPO Race as Hyperscaler Pipeline Hits $1.12 Trillion,” the most-recent RPO or backlog numbers tell the story: Oracle RPO up 359% to $455 billion; Google Cloud backlog up 38% to $106 billion; Microsoft RPO up 37% to $368 billion; and AWS backlog up 25% to $195 billion. Again, in a vacuum, the AWS numbers are outstanding — but in the real world, the AWS numbers fall far behind those of its competitors.
- AI vision and leadership. With Bedrock and its purpose-built AI chips, AWS is certainly a significant player in the AI space. But it has not distinguished itself as a breakaway player as have its competitors: Microsoft with its early alliance with ChatGPT; Oracle with its hypergrowth Oracle Cloud Infrastructure business for AI training and AI inferencing; and Google Cloud with its hugely impressive Gemini Enterprise. In that context, the AWS outage will be seen as yet another indicator of a one-time powerhouse failing to keep pace with the blistering pace of competitive innovation and surging marketplace expectations.
Final Thought
AWS’s huge annual re:Invent conference is scheduled for the first week of December. Before this week, AWS’s top priority for that event was no doubt to position the company as a world-class leader in AI innovation.
But that was then. The new imperative for AWS at re:Invent will be to reassure customers and prospects that the horrendous outage from earlier this week was a blip and an outlier, and that customers need not be concerned about any such thing happening.
Good luck with that — particularly in light of the related issues outlined above.
And as promised, here’s a list of companies hit by the outage from the tomsguide.com article headlined “AWS outage continues: All the apps and services that have been affected“:
But which apps and services have been affected by the big AWS outage? Here’s a full list, based on our first-hand experience and issues reported over at DownDetector.
- Adobe Creative Cloud
- Amazon (including Alexa and Prime Video)
- Apple Music
- Blink
- Boost Mobile
- Chime
- Coinbase
- Delta
- Duolingo
- Epic Games Store
- Fanduel
- Fortnite
- GoDaddy
- HBO Max
- Hinge
- Hulu
- InstaCart
- Life 360
- Lyft
- McDonalds app
- Microsoft Teams
- My Fitness Pal
- Office 365
- Outlook
- PlayStation Network
- Pokemon Go
- Ring
- Roblox
- Roku
- Signal
- Slack
- Sling
- Snapchat
- Square
- Starbucks
- Steam
- Strava
- Tidal
- Trello
- Ubisoft Connect
- Venmo
- VR Chat
- Wordle
- Xbox
- Xero
- Zoom
Ask Cloud Wars AI Agent about this analysis
