It’s 2006. Pluto has been demoted to a dwarf planet, “Bad Day” by Daniel Powter is the hottest track on the radio, and Twitter, now known as X, is born.
In the midst of that, Amazon Web Services (AWS) debuted its first service: Amazon Simple Storage Service, better known as Amazon S3. The concept was simple. Provide organizations access to a cost-effective data storage service that could be scaled as needed.
It worked, perhaps better than expected. Today, AWS has upward of 200 services and more than two million organizations that rely on its services. On AWS’s twenty-year journey to get here, it didn’t just secure its spot as a top cloud service provider—it also catapulted the growth of the cloud industry alongside it.
#TBT. IT Brew caught up with several cloud computing industry experts and the cloud giant itself to take us back almost two decades to where it all started. Shaown Nandi, director of technology at AWS, told IT Brew that the launch of S3 came at a nascent time for the cloud industry.
“When it launched in 2006, the word ‘cloud computing’ didn’t exist,” said Nandi, who previously served as the CIO of Dow Jones before joining AWS in 2019. “It just wasn’t a term, and it basically came out of this.”
Before S3, the hosting industry was the “advent” of the cloud computing industry, Sayegh told IT Brew. At the time, he worked at Rackspace Technologies, known back then as Rackspace Hosting.
“You would either go take your own computers and rack them and stack them and put them in that big warehouse or…Exodus would have their own computers that they would lease out to you, and then that would be called hosting,” he said.
Then, just three months into 2006, entered Amazon S3.
“These developers saw S3 and…from their lens, they could get storage, consume it—when they’re done with it, stop consuming it—and just have it on demand,” Nandi said. “There’s no paperwork, effectively. That was what was groundbreaking.”
The service was quickly received positively by the developer community.
“What was incredibly stunning that day in 2006 was [that] we had 12,000 developers sign up in one day,” Nandi said.
Though, some remained skeptical of AWS.
“I did not, but a lot of people dismissed it,” Sayegh said. “They would say something like, ‘Oh no enterprise will buy from a bookstore vendor.’”
However, Sayegh told us that AWS’s next service, Elastic Compute Cloud (EC2), came in “hot and heavy.” He said the service, which provided customers with on-demand compute capacity in the AWS cloud, was a real game changer for the industry.
“The revolution was being able to spin up and spin down compute and storage resources via API and pay per use,” Sayegh said. “That was the revolution that kind of took the world by storm.”
Talk of the town. So, what allowed the cloud service provider to climb the ranks after its initial debut? According to Michael Byrnes, managing director with Protiviti’s enterprise cloud practice and AWS global alliance leader, it was the subsidiary’s first-mover’s advantage that put them years ahead of competitors in the space.
“It always helps to be first,” Byrnes said. “Doesn’t mean that you did it the best. It means you were able to stumble sooner and then make it better before others even got there.”
He added that the cloud giant also succeeded at appealing to the “techie interest” with its unconventional naming of services that created buzz amongst developers at the time.
“I hate to say it. It was the cool thing to do,” Byrnes said. “It was the modern thing to do.”
Nandi credits the cloud giant’s “customer-obsession” approach—one of Amazon’s several leadership principles—to its continued success over the years as it consistently strives to maintain the trust of customers.
Part of that includes relying heavily on consumer feedback to build their services, a quality IANS Faculty Shannon Lietz found to heavily differentiate the company from others.
“I remember I spent six hours a week with Amazon basically telling them what we needed and why we needed it and gave them marching orders for the services,” Lietz said, adding that the “back and forth experimentation” between Amazon and its customers is something she hasn’t seen elsewhere.
Nandi added that this customer-focused approach also led AWS to lower its price 115 times since it first launched. Marko Dinic, CEO of Jatheon Technologies, an AWS-based data archiving software company, told IT Brew that the price reductions allow the cloud service provider to stay one step ahead of its competitors.
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“We keep getting pitched by other clouds all the time and their pitch is basically, ‘We can reduce your price,’” Dinic said. “And I get the quotes, I go through the process, and then within a few months, Amazon drops their price to match.”
During a 2007 quarterly call with shareholders, former Amazon CEO Jeff Bezos told analysts that it was too “premature” to speculate if AWS would be just as significant as its core retailing business. By 2015, the company, in an annual report, said that the subsidiary was bigger than Amazon.com was at its ten-year mark and growing at a quicker pace.
“AWS is already good enough today to attract more than one million customers, and the service is only going to get better from here,” it read.
Ripple effect. As AWS grew into a household name, it paved the way for several industries and standards. Aaron Fulkerson, CEO of Opaque Systems, told us that AWS helped propel the mobile application revolution that occurred shortly after it debuted its services.
“Particularly in the early days of mobile application development, I don’t think anybody built on anything other than AWS,” Fulkerson said. “They all had their compute and storage on AWS.”
Sayegh added that AWS also enabled the rise of the software-as-a-service industry, with major players like Netflix and Salesforce relying on the cloud behemoth’s services—ultimately leading to the rapid growth of a number of companies present today.
“AWS kind of left enough oxygen and room for another industry to emerge, which is managed services providers that essentially came in and managed AWS services and sat on top of AWS,” he said.
Lietz pointed to AWS’s impact on the dialogue around cloud security, recalling how certain security capabilities emerged from conversations they had with customers.
“They’ve really pushed the forefront of cloud security,” Lietz said. “When I look at just zooming way out, there’s still providers where you’re trying to figure out if they have what you need and they don’t always.”
New day. Today, almost 20 years since AWS debuted S3, the cloud giant has managed to maintain its chokehold on the cloud computing industry. According to Synergy Research Group, AWS had a global market share of 30% in the fourth quarter of 2024, with Microsoft Azure (21%) and Google Cloud (12%) trailing behind it.
These days, the conversation has shifted from how a book vendor could entice enterprises to whether the now established subsidiary can continue to take the crown in the emerging cloud AI race, an area some onlookers say it has been a late bloomer in.
“For a good amount of time, they were the front-runner absolutely hands down. I still see that,” Lietz said. “But with data and AI becoming such a big thing to conquer these days, you don’t see them front-running anymore.”
Since 2019, Microsoft has partnered with OpenAI, investing nearly $14 billion into the AI giant. Meanwhile, Google CEO Sundar Pichai—who now also serves as the CEO of Alphabet—made headlines when he told stakeholders that an “AI-first world” was near in Alphabet’s 2016 founders’ letter. The Mountain View, California-headquartered company has continued to make hefty investments in AI since.
Nandi told IT Brew that Amazon maintains a long-term approach to AI innovation and said the company is probably on its first couple steps of a long marathon.
“We don’t talk about what search engine was the best from 1996,” Nandi said, adding that the company expects to see a lot of growth in the space.
In a Feb. 6 call with analysts, Amazon CEO Andy Jassy also placed big bets on the subsidiary’s in-house AI chips.
“Building outstanding-performing chips that deliver leading price performance has become a core strength of AWS,” Jassy said, adding that it is also something that differentiates the cloud giant from competitors.
Byrnes told us that AWS has some catching up to do, but he is confident that it won’t be hard for the cloud giant to gain its footing.
“Google has the data. Microsoft [has] the partnership with OpenAI,” Byrnes said. “AWS decided to stick by its guns and build their own entire infrastructure, including the chips, so that I think is something that will tip eventually in their favor, but it’s going to take a little while to get there.”
This is one of the stories of our Quarter Century Project, which highlights the various ways industry has changed over the last 25 years. Check back each month for new pieces in this series and explore our timeline featuring the ongoing series.
