Since launching AWS in 2006 with technology that allowed businesses to offload their data storage and compute capacity and rent it all via the Web, Amazon has added products like databases, analytics software, developer tools and application monitoring services. It's also dropped prices 51 times.
Among the products Bezos cites in the letter is a database engine called Aurora that he says has up to five times better performance than the typical implementation of an open-source database called MySQL and is "1/10th the price of the traditional, commercial-grade database engine."
For another type of high-speed database, Amazon's product DynamoDB competes with MongoDB, a start-up valued at $1.6 billion. Kelly Stirman, MongoDB's vice president of strategy, said plenty of customers use his company's product instead of Amazon's because MongoDB also runs on clouds from Microsoft and Google as well as in data centers that clients operate themselves.
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Stirman sees plenty of room for software vendors to build services that utilize AWS and make the platform better for businesses that want more than storage and servers. Still, he recognizes the potential threat as AWS continues to grow.
"Every software company needs to view them as a partner and potentially a long-term competitor," Stirman said.
In the $23 billion cloud infrastructure market, AWS ranks first with 31 percent share, followed by Microsoft, IBM and Google, according to Synergy Research Group. Analysts predict AWS revenue will more than double by 2017 to $16.5 billion, based on data from FactSet. In their efforts to catch up, Microsoft and Google have been offering start-ups $100,000 to utilize their offerings.