AWS Canada live

Amazon Web Services launched its new Canada (Central) Region last week, in a move designed to provide local service delivery and deliver rapid service innovation.


Amazon Web Services went live with its new Canada (Central) Region last week and is pumped to deliver a range of services out of data centres based in Montreal. With the help of Amazon cloud pioneer and CTO Werner Vogels, AWS Canada celebrated launch of this sixth North American region (fifteenth worldwide) at an Executive Insight event in Toronto hosted by Canadian director Eric Gales. Follow on to an Enterprise Summit focused on educating the local enterprise market on the innovation potential in creation of an AWS-powered cloud CoE held at the Allstream Centre this past September, the Insight event was attended by an enthusiastic crowd of 400 or so prospects and partners curious about AWS momentum in the country.

Three KeYs:

Why Canada and why now?  According to Eric Gales, questions on cloud have moved on from “what, why, and when”; today, he claimed “it’s all about now and how.” For AWS, the ‘now’ has to do with both the maturation and the peculiarities of the Canadian cloud marketplace. InsightaaS research has found, for example, that virtually all Canadian organizations with 100-plus employees have adopted cloud within their operations for at least some of their workloads, and even in the small Canadian business segment, 40 percent are using cloud. At the same time, however, concerns over data sovereignty have translated into enterprise preference for local hosting, a market response that has led several global service providers to establish Canadian operations. With launch of its Canadian Region, AWS joins large providers such as Microsoft who have established local cloud operations to capture Canadian demand, particularly that of public sector organizations who require data residency.

The AWS decision to locate in Montreal has a similar financial logic. A ‘region’ in the AWS frame of reference is made up of multiple service delivery points to ensure redundancy and resiliency. In Canada, the company has worked with several delivery partners, most notably ROOT Data Center and Hypertec DSC, to colocate operations in Quebec facilities that are blessed with abundant and inexpensive sources of clean hydro power. At its launch, for example, ROOT boasted colocation services for “less than the price of power,” an enticing proposition aimed at attracting the attention of out of province, and even international clients. And while key Canadian markets are located in the GTA area, according to AWS, the new Canada (Central) Region will delivery fast, low-latency access to infrastructure services. AWS evangelist Jeff Barr described latency times for transfers to Canadian cities as follows: 9ms to Toronto, 14 ms to Ottawa, 47ms to Calgary, 49ms to Edmonton, 60ms to Vancouver; and to important US markets as 9ms to New York, 19ms to Chicago, 16ms to the US East region based in Northern Virginia, 27ms to the US East region based in Ohio, and 75ms to the US West region in Oregon.

While AWS has serviced many Canadian customers out of US-based resources for a decade, over the last year the company has doubled down on Canadian investment. As to the ‘how’, Gales explained that AWS established a Toronto sales office a year ago and has since deployed additional local staff for certification training and professional services delivery: AWS Canada now has 10,000 customers and is aggressively growing its integration and technology partner ecosystem. Launch of local AWS services is the culmination of this activity.

Up the services value stack: Over the past two years, price wars between the major infrastructure services providers, AWS, Google and Microsoft, have resulted in a race to the bottom for increasingly commoditized IaaS services. In January of this year, AWS announced its 51st price cut, a market tactic with a seemingly limited shelf life. With approximately 31 percent of global market share – the next three competitors Google, Microsoft and IBM accounted for 22 percent in April, according to Synergy Research – AWS market dominance continues to hold sway. However, some research suggests an increasingly strong showing from competitors – for example, a Morgan Stanley survey of CIOs has indicated that Azure adoption will slightly outpace AWS by 2019, while Gartner has pointed to strong year-over-year growth for Microsoft and Google (100 percent over last year’s quarter), and a declining AWS growth rate (63 percent in Q4 2015 and 57 percent in Q1 2016).

A more sustainable tactic than price leadership is differentiation through the development of new services, a market value strategy that Werner Vogels pointed to in a Q&A session with Gales at the Insight event. According to Vogels, while AWS core offerings continue to support IT managers with a compelling argument for use of public cloud services – “it’s still about capital savings; it’s very hard today to go to your CFO and ask for millions of dollars for hardware”; and “a 1% efficiency improvement is very significant for some companies” – AWS is increasingly focused on development of new services. The pace of innovation is rapid at AWS, Vogels noted, and at a rate of one new release every three days, AWS service options are growing exponentially; this year, in response to customer feedback, the company has introduced over a thousand new features and services, a phenomenon that Vogels argued helps customers feel that they are “in charge.”

This services focus appears to be resonating in Canada. As Devon Galloway, CTO and co-founder of Vidyard, a Waterloo-based provider of video capabilities to businesses, explained in his customer testimonial, he is most impressed by the ability to use “lots of other technology” on the AWS platform, and “amazed by how quickly Amazon follows them, creating a managed service to do what it is they have begun.” And while AWS expects service delivery in Canada to focus on Elastic Compute Cloud (EC2), Simple Storage Service (S3) and the Amazon Relational Database Service (RDS), the new region will offer a broad range of services – for his part, Gales is relying on the “development of new services to help expand the user base.”

Vogel’s crystal ball: Post Region launch, Vogel typically sees an acceleration of AWS penetration in a particular geography, and in Canada he expects that AWS will become the “default” cloud provider. “It’s not just about IT services – compute, storage, networking. We have done that for many years and do it very well. It’s about servicing our customer needs,” he noted. “It’s about data warehousing, analytics, mobile” and about “doing the heavy lifting on behalf of customers” in these areas so that “the only thing they have to do is click a button and fill in the business logic.” Going forward, Vogels believes that cloud automation will continue to drive this focus on applications. While the container revolution, combined with AWS managed services will free the developer from “worry about availability zones, reliability, security, scale, and consistent performance,” businesses who “underestimate the focus on data and data analytics” do so at their peril. “Now that cloud has democratized capability, and everybody has same access to computational capability,” the application or the exceptionality of operation will serve as competitive differentiation, and success will be measured in the quality of data the business owns.

The bottom line:

While allowing that there are several paths to cloud, in his presentation Vogels expressed some urgency around pushing the digital agenda – which AWS is supporting through services innovation. Vogels counted 90 separate AWS services that “go beyond the infrastructure pieces,” an impressive achievement that also speaks to the fact that competition on commodity offerings is unsustainable. If this performance – and the enthusiasm at the Insight event – is any indication, AWS competitors would do well to take note of the company’s momentum. The question remains, how far and how fast AWS will go up the stack…. and what new entities will find themselves part of an evolving competitive landscape?



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