One of my primary investment theses at the moment is that the cloud is not only growing, but that we are just scratching the surface of what’s possible. That’s why when I read that Amazon’s S3 growth has declined slightly, I was surprised. To be clear, it’s not like S3 didn’t grow; Amazon ONLY added 143,000,000,000 objects last quarter and that’s ~15-20% growth in a quarter. Still, I wouldn’t have expected growth rates to decline any time soon.
I can see several potential reasons for this decline. Some are troubling and some aren’t, but it’s definitely going to be something worth watching.
- Increased competition. Amazon S3 certainly isn’t the only service that’s providing cloud storage. Dropbox and others are running around in Amazon’s space more than ever before and this decrease in a growth rate is related to declining market share, NOT a shrinking market.
- More sophisticated clouds. “S3” stands for Simple Storage Service, and it is REALLY simple. I have stated before that I believe that as the cloud matures it will be much more about platforms and software then it is about simple infrastructure. Perhaps Amazon S3 isn’t growing the way it was because people are using Office365 or Google Docs instead of just storing files in he cloud, they’re running content management systems with AWS Elastic Block Storage (EBS is an amazon product that actually competes with S3), or they’re using Instagram instead of just uploading pictures. I will admit that one of the holes in this theory is that even if this were true, some of the growth should be owned by companies that use Amazon S3 on the back end.
- While I suspect some combination of 1 and 2 are your culprits, this at least must be watched closely by those of us that are planning to build businesses and careers on the growth of the cloud.