It’s tough to say that a $100 billion business finds itself at a critical juncture, but that’s the case with Amazon Web Services, the cloud arm of Amazon, and the clear market leader in the cloud infrastructure market.
On Tuesday, the company announced that CEO Adam Selipsky was stepping down to spend more time with his family and recharge a bit, according to his statement. His replacement is AWS lifer Matt Garman.
During Selipsky’s tenure, growth for the cloud division has slowed pretty dramatically, falling from 33% in Q2 2022 to 12% in Q2 and Q3 2023 before ticking up to 13% and 17% in its two most recent reports — although to be fair, growth has slowed across the industry, as the space has settled into a more mature state. Yet at the same time the core infrastructure business seems to be maturing, it is being rocked by a major disruption in the form of generative AI.
Both Selipsky and Garman spent a long time at the company, with Selipsky leaving for a five year interlude as CEO at Tableau before returning to run AWS in 2021. Garman has spent his entire career at the company, rising from Amazon intern to AWS product manager to CEO over almost 20 years with the company.
Forrester Analyst Tracy Woo thinks it was time for a change. “Selipsky’s departure is unsurprising. AWS has seen slower growth under his tenure. The generative AI movement caught AWS flat-footed, placing them at third in AI among the hyperscalers — unfamiliar territory for AWS,” she said.
Ray Wang, founder and principal analyst at Constellation Research, agrees the timing is right, even though Selipsky played a key role in keeping AWS stable during Jassy’s transition from AWS CEO to CEO of the whole company.
“The current morale has not been the best, and customers’ expectations remain high as we enter an Age of AI. This sets Matt Garman up to be in a good place to take AWS to the next level,” Wang told TechCrunch.
Garman must deal with a market perception that AWS is behind Microsoft and Google in generative AI. AWS has stayed steady at around 33% market share over the years, while Azure has continued to creep up, reaching 25% in the most recent quarter, up 4 percentage points since the end of 2021, per Synergy Research. This is due in part to Microsoft’s speed in capturing the AI technology wave, driven by strategic investments and acquisitions such as OpenAI and Inflection AI.
Garman will be judged on how he steers the company through these changing market dynamics, says Rudina Seseri, founder and managing partner at Glasswing Ventures. “AWS has long dominated market share in the cloud market share, but Garman is entering the position with a few unique challenges,” Seseri told TechCrunch.
“Additionally, the end of egress fees means cloud platforms will need to build stronger product ecosystems in order to retain customers and remain competitive beyond price,” she said.
The question is should AWS be competing directly with Google and Microsoft at the large language model level, or should they play more to their pure infrastructure and platform strengths? Forrester analyst Lee Sustar thinks that’s AWS’s big strategic question right now.
“AWS remains the market share leader by a long way, but the Microsoft/OpenAI combination has given Azure the initiative on bringing to market AI services as well as AI-infused versions of existing services. That poses a strategic question for AWS — do they mimic Azure’s approach by moving up the technology stack or stick with the ‘go build it’ approach that’s been so successful,” Sustar said.
IDC analyst Rick Villars, perhaps providing an answer for Sustar’s question, sees building a data infrastructure as the way for the company to go. In fact, the table may have been set for such an approach with the release of Amazon Bedrock last year.
“Data is what I think is the next big workload discussion that companies are going to have — like they had to do ERP in the 90s, e-commerce in the 2000s and later mobile. This is the next big big investment,” he said, and he thinks AWS is in a good position to go after that market with Garman at the helm.
