Amazon Web Services, the biggest of the cloud-computing providers, has a new line of work: Taking other cloud-computing giants into other countries.
On Wednesday, Salesforce.com announced it would use A.W.S. to expand in Canada and Australia, in a deal valued at about $400 million. If successful, the value of the transaction will most likely get much bigger.
“For sure, we’re talking of billions of dollars in services over the next several years,” said Marc Benioff, the co-founder and chief executive of Salesforce.
Salesforce already uses A.W.S. for some of its businesses, but this is the first time its key applications will be on someone else’s computers.
Mr. Benioff said Salesforce had evaluated similar deals with Microsoft and Google, the other two giants in selling cloud-computing to corporations. So far, A.W.S. is still ahead on its range of offerings and low prices, he said. Salesforce will review the contract in one year, he added.
Cloud computing uses a massive density of computer servers and sophisticated software to rent data storage, computing and applications to companies. Besides those capabilities, the deal with A.W.S. enables Salesforce to get into new markets faster, since Salesforce doesn’t have to find facilities and recruit talent.
Amazon has also established itself in countries like China that have strict requirements about what data can be sent offshore. Meeting those regulations is difficult and time-consuming, and companies like Salesforce put a premium on getting into markets quickly.
While the deal could be a sign of larger trends in corporate computing, as businesses evaluate whether to keep their own computers or work with the big public clouds, for now it also has limits.
That spending will probably be limited to new countries where Salesforce expands, Mr. Benioff said. That may change, he added, as the three giants bring down prices and increase the services they offer.
“We have our own infrastructure in the U.S., Japan, the U.K., France and Germany,” Mr. Benioff said. “If you have critical mass, your own infrastructure is still cheaper.”
Mr. Benioff said that, down the line, A.W.S. may also become competitive purely on price, as their scale and engineering enables them to run big computing systems at a lower cost. “If Amazon, Microsoft and Google are smart, the price difference will change,” he said.
Adam Selipsky, vice president of marketing and sales for A.W.S., said the company was intent on getting its prices down enough to replace existing servers in established markets.
“Our prices relative to what they can build themselves – we’re already at a stage where it’s competitive,” he said. “We’re just at the starting point of enterprise adoption.”
Source: NY Times