AWS, the cloud arm of Amazon, is facing a critical moment in its $100 billion business. The company recently announced that CEO Adam Selipsky would be stepping down, with Matt Garman taking his place. Under Selipsky’s leadership, AWS experienced a significant slowdown in growth, but this is not unique to the company. The entire cloud infrastructure market has matured, resulting in slower growth across the industry. However, AWS now faces a new challenge in the form of generative AI, which has disrupted the core infrastructure business.
Forrester Analyst Tracy Woo believes that Selipsky’s departure was expected given the slower growth during his tenure. Additionally, AWS has fallen behind in generative AI compared to competitors like Microsoft and Google. This presents an opportunity for Garman to lead AWS to the next level. Ray Wang, founder and principal analyst at Constellation Research, agrees that it’s the right time for a change, considering the current morale and high customer expectations in the Age of AI.
Garman faces the perception that AWS is lagging behind Microsoft and Google in generative AI. While AWS has maintained around 33% market share, Azure has been steadily gaining ground, reaching 25% in the most recent quarter. Microsoft’s strategic investments and acquisitions have contributed to its success in capturing the AI technology wave. Rudina Seseri, founder and managing partner at Glasswing Ventures, believes that Garman has unique challenges ahead as he takes on this role.
The question for AWS is whether it should directly compete with Google and Microsoft in the large language model space or focus on its infrastructure and platform strengths. Forrester analyst Lee Sustar sees this as AWS’s strategic dilemma. While AWS remains the market share leader, Azure’s partnership with OpenAI has given it an advantage in bringing AI services to market. IDC analyst Rick Villars suggests that AWS should focus on building a strong data infrastructure as the next big investment opportunity. With Garman at the helm, AWS is well-positioned to pursue this market.
In conclusion, while AWS has been a dominant force in the cloud infrastructure market, the company is now at a critical juncture. The departure of CEO Adam Selipsky and the rise of generative AI present both challenges and opportunities for AWS. Matt Garman must navigate these changing market dynamics and decide whether to compete directly with Microsoft and Google or focus on AWS’s core strengths. Building a robust data infrastructure could be the key to AWS’s future success.
