Describing a $100 billion enterprise as being at a pivotal juncture might seem paradoxical, yet that’s precisely the situation facing Amazon Web Services (AWS), the dominant player in the cloud infrastructure market
According to a statement released by the company on Tuesday, CEO Adam Selipsky is resigning in order to devote more time to his family and recharge. In his stead is Matt Garman, an AWS lifer.
The cloud division’s growth has decelerated significantly during Selipsky’s tenure, from 33% in Q2 2022 to 12% in Q2 and Q3 2023, before rebounding to 13% and 17% in its two most recent reports, respectively.
However, growth has slowed across the industry as the space has reached a more mature stage.
Simultaneously, the fundamental infrastructure industry, which appears to be reaching maturity, is undergoing a significant disruption due to generative AI.
Although both Selipsky and Garman remained at the organization for an extended period of time, Selipsky departed for a five-year stint as CEO of Tableau prior to resuming his role at AWS in 2021.
Over the course of nearly two decades, Garman has risen from Amazon intern to AWS product manager to CEO during his tenure at the organization.
Analyst at Forrester Tracy Woo believes a change was warranted. Departure of Selisky is not unexpected. AWS’s development has slowed during his tenure.
“AWS was taken aback by the generative AI movement, which ranked them third among hyperscalers in AI — uncharted territory for AWS,” she explained.
Forrester Tracy Woo, analyst
Constellation Research’s founder and principal analyst, Ray Wang, concurs that the time is appropriate, despite the fact that Selipsky was instrumental in maintaining AWS’s stability during Jassy’s transition from AWS CEO to company CEO.
“At this time, as we enter the Age of AI, customer expectations continue to be high and morale has not been particularly high. “This positions Matt Garman favorably to lead AWS into its next phase,” Wang reported.
Ray Wang, Constellation Research’s founder and principal analyst
Garman is confronted with the market’s perception that AWS lags behind Google and Microsoft in generative AI.
Synergy Research reports that Azure’s market share has increased by four percentage points since the end of 2021, to 25% in the most recent quarter, whereas AWS’s market share has remained relatively stable at around 33% over the years.
Microsoft’s rapid adoption of AI technology, facilitated by strategic investments and acquisitions including OpenAI and Inflection AI, has contributed to this.
Garman’s performance will be evaluated based on how effectively he guides the organization amidst the evolving market dynamics, according to Rudina Seseri, managing partner and originator of Glasswing Ventures. Seseri said,
“Garman is entering the position with a few unique challenges, whereas AWS has long dominated the cloud market share.”
Rudina Seseri, managing partner and originator of Glasswing Ventures
“Moreover, the elimination of egress fees will require cloud platforms to strengthen their product ecosystems to retain customers and maintain a competitive edge beyond price,” she continued.
Should AWS compete directly with Google and Microsoft at the level of large language models, or should they focus more on leveraging their infrastructure and platform expertise? Current Forrester analyst Lee Sustar considers this to be AWS’s most significant strategic dilemma.
Azure now leads AWS by a significant margin in terms of market share. However, the integration of OpenAI and Microsoft has provided Azure with the foresight to introduce AI services and AI-enhanced versions of extant services.
“This presents AWS with a strategic dilemma: do they emulate Azure’s approach by advancing the technology stack, or do they continue with the successful ‘go build it’ methodology?” Sustar stated.
Lee Sustar, Forrester analyst
IDC analyst Rick Villars, possibly in response to Sustar’s inquiry, believes that the organization should construct a data infrastructure. Indeed, the groundwork might have been laid for such a strategy with the introduction of Amazon Bedrock a year ago.
“I believe that companies will soon have to discuss data as their next major workload, just as they did enterprise resource planning (ERP) in the 1990s, e-commerce in the 2000s, and mobile thereafter.” “This is the next big, big investment,” he said, adding that under Garman’s leadership, AWS is well-positioned to pursue that market.
