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Amazon and the power of default choices

Written By: langdon on December 10, 2011 No Comment

Amazon and the power of default choices

Estimates of Amazon’s revenues in the cloud IaaS market vary, but you could put it upwards of $1 billion and not
cause too much controversy. That’s a dominant market share, comprised heavily of early adopters but at this point, also drawing in the mainstream business — particularly the enterprise, which has become increasingly comfortable adopting Amazon services in a tactical manner. Today, Amazon’s weakness is the mid-market — and it’s clear from the revenue patterns, too, that Amazon’s competitors are mostly winning in the mid-market.

There are many, many other providers out there who are offering cloud IaaS, but Amazon is the brand that people know. They created this market; they have remained synonymous with it.

That means that for many organizations that are only now beginning to adopt cloud IaaS (i.e., traditional businesses that already run their own data centers), Amazon is the default choice. It’s the provider that everyone looks at because they’re big — and because they’re #1, they’re increasingly perceived as a safe choice. And because Amazon makes it superbly easy to sign up and get started (and get started for free, if you’re just monkeying around), there’s no reason not to give them a whirl.

Default choices are phenomenally powerful. (You can read any number of scientific papers and books about this.) Many businesses believe that they’ve got a low-risk project that they can toss on cloud IaaS and see what happens next. Or they’ve got an instant need and no time to review all the options, so they simply do something, because it’s better than not doing something (assuming that the organization is one in which people who get things done are not punished for not having filled out a form in triplicate first).

Default choices are often followed by inertia. Yeah, the company put a project on Amazon. It’s running fine, so people figure, why mess with it? They’ve got this larger internal private cloud story they’re working on, or this other larger cloud IaaS deal they’re working on, but… well, they figure, they can migrate stuff later. And it’s absolutely true that people can and do migrate, or in many cases, build a private cloud or add another cloud IaaS provider, but a high enough percentage of the time, whatever they stuck out there remains at Amazon, and possibly begins to accrete other stuff.

This is increasingly leaving the rest of the market trying to pry customers away from a provider they’re already using. It’s absolutely true that Amazon is not the ideal provider for all use cases. Customers who are experienced with Amazon are better educated about the cloud and their needs, and therefore become better consumers of their next cloud provider.

But it does not change the fact that Amazon has been working on conquering the market one developer at a time, and that in turn has become the bean-counters in business saying, hey, shouldn’t we be using these Amazon guys?

This is what every vendor wants: For the dude at the customer to be trying to explain to his boss why he’s not using them.

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