AWS in fight of its life as customers like Dropbox ponder hybrid clouds and Google pricing
AWS doesn't have the public cloud to itself anymore. It faces two gigantic competitors trying to poach reference customers and growing adoption of hybrid cloud. — For many years Amazon Web Services was the only public cloud in town.
Context & Ripple Effects
When Gigaom asked in March 2012 who could possibly be next after Amazon's No. 1 position in cloud computing, the honest answer was nobody had closed the gap yet. Two years on, the question has changed character: per the reporting, Google is now competing against AWS directly on price while working to poach its reference customers, and hybrid cloud adoption is growing as an alternative to all-in public cloud.
The story travelled widely for a single analysis piece — picked up by ReadWrite, The Register, Gigaom Research and others — which itself signals how contested the 'default cloud' assumption had become by mid-2014. The most concrete tremor is unconfirmed but telling: Dropbox, one of AWS's best-known showcase customers, is reportedly pondering a move toward hybrid clouds rather than relying solely on AWS.
First-order effects
- Google's pricing offensive puts direct margin pressure on AWS, whose list prices had long set the de facto ceiling for the market.
- Dropbox's reported hybrid-cloud deliberation threatens AWS's most valuable sales asset — marquee reference customers it can cite to enterprise buyers.
Second-order effects
- Microsoft and Google are forced into a price-and-reference-customer land grab that converts cloud computing from a premium product into a commodity bid, pushing AWS to respond with cuts or added services to defend accounts.
- Enterprises shopping infrastructure gain bargaining leverage they never had when AWS was the only credible bidder, and vendors serving hybrid deployments find a newly receptive buyer base.
Third-order effects
- If the pattern holds, public cloud procurement settles into a multi-vendor discipline — workloads split across providers and private infrastructure — ending the single-default-vendor era the 2012 coverage took as given.
- Sustained price competition would push hyperscalers to differentiate on higher-layer services rather than raw compute, shifting where the margin in cloud actually lives.
The trend: Cloud infrastructure is moving from an AWS-only default toward a contested, price-driven multi-vendor market in which even flagship customers hedge across hybrid deployments.