‘Voice is going to become the most important interface for digital systems’
It has been almost a year since AWS (Amazon Web Services) launched its first data center in India (June 2016) and announced India as a new region for its services. It is now moving ahead and introducing new features and services for its customers.
BW CIO World met Dr. Werner Vogels, Chief Technology Officer, Amazon.com to discuss the growth of the business in India, and the new services it is launching this week.
Excerpts from the interview follow:
BW: How has your business grown in the past one year?
We have the right variety of customers here and some are our oldest customers. There are customers like Hungama that have been with us for 8 – 9 years. We now have a local region and it has really accelerated.
Last year, we had 75,000 customers and it has grown to 120,000 -- that’s a growth of over 50 per cent. The new region on the ground has really accelerated.
It is not only Indian companies that are making use of the India region. It is also companies from outside India that use this region to target Indian customers. Likewise, there are Indian companies who run their businesses worldwide.
Our first quarter global revenues were $3.7 bn and 42 per cent growth in revenue. So it is a $14 bn run rate at the moment. This is healthy revenue growth even with 60 price reductions.
We introduced more than a 1,000 features last year and most of those were driven by customer demand.
BW: Which are the verticals where you see a lot of traction?
There isn’t a vertical that is not making use of AWS. In financial services, we have customers like Axis Bank, Bajaj Financial Services, and PayU. During the demonetization period, PayU saw tremendous growth in their business; they had moved to AWS only a few months earlier. Media companies are becoming a driver of digital services.
There are players like Hungama, Netflix, HotStar, NDTV, India Today – all of them are making use of AWS. In construction, there is the Brigade Group. They are running all their analytics on AWS with SAP HANA. In manufacturing, we have SuperMax.
There isn’t a vertical that isn’t making use of AWS in one way or the other.
All of those are really driven by the desire to integrate more analytics into their business processes. They are either making use of existing data streams that they already have or they are creating new ones. For example, in IoT, Tata Motors put GPS and sensors on their fleet of trucks to know exactly where they are, or to do preventive maintenance. This (analytics) is being done on the AWS cloud.
We are seeing Indian SAAS companies being very successful in targeting small and medium businesses. A great example is Hotelogix, who help boutique and smaller hotel chains by providing them with enterprise grade property management as a service.
Likewise, we see small and medium businesses in India consuming AWS – for the services that are built on top of it by ISVs (Independent Software Vendors).
BW: You have two availability zones in India. Will you increase the number of zones to address rising market demand?
Over time we would, if we continue to see the same growth as in other markets. But not at the moment.
BW: Amazon has always been aggressive on pricing. How does your pricing compare with that of competitors like Microsoft and Google?
There may be some confusion about our pricing strategy. It would be a mistake to think that we are doing (aggressive) pricing because our competitors are doing it. We have always been rather independent (on pricing). If we can lower our costs and this happens from two mechanisms: one, increase the number of customers to create additional economies of scale.
The other thing is the way we do innovation in our data centers to reduce costs. Those two things work together. Whenever we see increase in efficiencies for ourselves, we will lower pricing.
Additional levels of efficiency in our storage operation (S3) allow us to do these price reductions. It is not driven by how the competition works in the market but purely on how our customers help us reduce our costs.
BW: What do startups look for in cloud service providers? How are you helping?
Startups look for the cloud providers that offer the broadest range of services. They ask where they can get started in the cheapest way. We have programs like Activate to help startups get on the cloud. We give them free credits. If you talk to the startups they ask about the solution architect support, and the architectural help that they are getting from AWS.
It is important for startups not to waste time and effort to build technologies that they can get on Amazon. If they want to do analytics for instance, a wide variety of analytics is available on AWS. If they do not want to waste time managing databases, they should come to AWS.
Startups choose AWS for the variety of services and the breadth and depth of it. More than 90 per cent of the hottest startups in India are on AWS.
BW: Tell us more about SaaS Contracts and the AWS Marketplace.
Many customers and SaaS vendors were asking us for this. They wanted the ability to negotiate longer term contracts with the SaaS vendors. So, we gave the ISVs capabilities to have one- two- and three-year contracts to be made available on the AWS Marketplace. Customers usually take a one-year contract and when they like the software they want to extend it.
SaaS Contracts makes it easy to extend it from one year to a multi-year contract – and also to grow the number of seats and instances.
BW: How are you addressing demand for artificial intelligence, voice-driven applications and image recognition applications?
Voice is going to become the most important interface for digital systems. It is the natural way of interaction. There are large groups in society who are not digital natives – keyboards and screens are not a natural interface for them. How can we build access to digital systems that includes everyone? Voice is the natural way to do this.
We see a tremendous interest in the Amazon Alexa and Echo devices. There are three components to those: augmented speech recognition, natural language understanding, and text-to-speech. We have Amazon Poly for text-to-speech. For natural language understanding we have a service called Amazon Lex. Customers can also do image recognition with our service.
We have been doing machine learning for a long time and many of our customers are doing it. All the recommendation services on Hungama or NetFlix are driven by machine learning.
There will not be many organisations that do deep learning themselves. It is science and require specialists.
Many of our customers will be consuming AI services for higher level services. We see a tremendous pick up for these services by many of our customers.
