AWS CEO Jassy On The JEDI Cloud Contract, Trump's Amazon Comments And AWS Profits

Increasingly Cloudiness

Amazon Web Services CEO Andy Jassy made a rare media appearance last week when the leader of Amazon's cloud division took to CNBC to talk politics, and the future of Amazon's cloud business.

The interview -- which comes as Amazon's cloud competitors, Google and Microsoft, took to their respective stages over the past two weeks to share the progress at the Microsoft Build and Google I/O developer conferences -- highlighted not only how new trends like AI and customized data center infrastructure will help grow the cloud. Jassy also fielded hot-button questions, such as how AWS sees the sought-after JEDI cloud contract playing out, and what he makes of President Trump's criticism of Amazon.

Here are Jassy's responses to the biggest questions on everyone's mind about AWS right now.

Could AWS become the most profitable business unit within Amazon from a sales perspective?

I think it's possible, but we have a long way to go just given [the size of] our business if you look at the market segments that AWS addresses; infrastructure, software, data center services, and then we are building services further up the stack. Globally, that is trillions of dollars in market segment possibility and I think it's only going to get bigger as the basic unit of compute is coming down. I think it's possible in the fullness of time that we could be the biggest business in Amazon, but I expect our consumer business to continue to grow as well.

How will AI grow the cloud economy?

If you look at machine learning and the AI space, it's growing like crazy and the vast majority of machine learning being done in the cloud space is happening on top of AWS … Companies like Cerner, Expedia, Pinterest, the NFL, and Zillow. Companies have so much data and they don't have great ways of getting gems out of that information that could change their customer experiences. Until we launched SageMaker at reinvent, it was too hard for [people like] researchers and scientists to have to build machine learning models. With SageMaker, it's a managed service that now everyday developers easily building machine learning models, train them, tune them, and then put them into applications so that the apps can be infused with that intelligence.

Are you throwing your hat in the ring for the JEDI Government Cloud Contract, and how do you expect the competition to play out since other tech companies have raised issues around the bidding process?

Over 3,000 government agencies globally use AWS, most famously, the Intelligence Committee, so we are really deeply committed to government business. We will bid on JEDI contract when it comes out and it will be a very competitive bid. I think every major technology provider is interested in that business.

I think that there has been a lot of noise from some of the older guard suppliers who are worried about losing some business, but our government deserves the best technology, the most capabilities, innovations, and best cost structure -- especially at this time. That's incredibly important to our defense and our future. [The government] has been very clear from the get-go that they will pick the platform and the provider that they think gives them the best chance to do what they need to do over the next couple of years.

What is your view on the president's comments on Amazon?

I think all you can do if you're a business that is broad like we are is just focus on what customers want. The thing you can control is providing a great customer experience. That's the thing we've focused on for the past 23 years through many presidents, and that's the thing we'll continue to focus on for the next 23.

Microsoft says that trust is key differentiator in the cloud. Amazon is in so many businesses aside from cloud. Should that give customers pause?

I think the way Amazon partners with customers is very unique. I think most technology companies today are competitor-focused or product-focused. 'We know what the product should do, thank you Mr. and Mrs. Customer, but leave it to the experts.' Those strategies can work - but it's just not ours. We are customer-focused and the vast majority of what we build is driven by what our customers tell us matters to them. The rest is [driven by] by listening to the problems they are trying to solve and inventing [the solution] on their behalf. If you ask our enterprise customers -- or any of our customers -- the way we partner is very different.

I also think that we are so long-term oriented unlike most of these companies that are going quarter to quarter, where the norm in the technology space is sales people showing up the day before a quarter [ends] and harassing [a customer] to do a deal and are not to be heard from again until the next time. We don't think that way - we are building a business and we will always do what's right for customers. We have belief that if we do right by customers, our business will follow along for the long term.

What is AWS' responsibility to data protection?

Our customer's data is our customer's data. Full stop. They get to choose where it lives in AWS and it doesn't move unless they chose to move it. To us it just looks like a blob, so they have a responsibility for their own applications to make sure it's safe. We have a responsibility as it runs in our infrastructure to make sure no one else can have access to it. Our customers have a lot of different ways to protect themselves, including being able to encrypt that data.

What is the next step in Amazon's work to customize infrastructure within its data centers?

We have been working in this area for a very long time. Over time, we have designed our own hardware with such giant scale, so it makes sense to optimize that performance and that cost structure. We also bought a chip company in Israel [Annapurna Labs] a few years ago, so we have been designing our own chips for a while, and I think you can expect us to continue to do so. We will continue to build interesting hardware that is interesting to customers. For instance, we had a lot of customers that wanted to move petabytes and exabytes of data to AWS, but doing that over the wire is very slow and very expensive, and they didn't have the bandwidth to do that. So, we built an appliance called Snowball that allows people to load their data into an appliance and send it to us. It's encrypted three different ways and it also has compute on it, so for customers collecting data at the edge, they can run analytics on that data and they can act on those insights. They just fill up [Snowball], send it to us, and we load it up into our data centers. We will continue to build hardware as it benefits our customers.

Where are the big areas that you think will drive cloud activity in the next five to ten years?

I see several. A lot of the autonomous vehicles are going to be using machine learning. Another is that there are billions of devices on the edge in our offices, factories, ships, and fields, that have by definition, relatively little CPU, so the cloud becomes disproportionately important to them.

A more traditional [area] that is being radically reinvented is databases. Over the last few decades, it's been a rough place for enterprises because they've had to contend with the old guard database providers like Oracle -- it's expensive and also, they constantly audit their customers and fine them if they find something -- so customers are moving to open-source database engines like MYSQL, but to get the performance of those open engines out of commercial-grade data bases is really hard, so they asked us to try to solve that. We built Amazon Aurora, which is fully MYSQL and at least as durable and available as commercial databases and one tenth of the cost. It's the fastest growing service in our history.