AWS Bolsters Bet on Local Cloud, Homegrown Chips

Matt Day, Ian King and Dina Bass (Bloomberg) -- Amazon.com Inc.’s cloud computing division is adding products that help customers maintain local control of their data, a bet that could help it fend off rivals Microsoft Corp. and Alphabet Inc.’s Google.

Amazon Web Services has a wide lead in selling on-demand software services, a business built on the economies of scale provided by vast server farms in data centers. Last year, the company went small, for the first time selling services for customers’ own data centers. The move acknowledged demand from customers requiring faster processing and the need to meet regulatory requirements by storing information inside their own walls.

AWS bolstered that bet on Tuesday, kicking off its annual customer conference with two new variants of Outposts, the server rack product it started selling a year ago. While prior versions required customers to buy a complete, filing cabinet-sized server rack, new versions come packaged as small as a single, 1 3/4-inch-tall unit that customers can plug into their own data center setup. Amazon also announced versions of its software for containers, a popular way to make applications and related software run reliably.

The company also outlined plans to expand Local Zones, or cloud servers staged in big cities, closer to some customers than Amazon’s sometimes-remote server farms in places like Ohio, Oregon and Virginia. Launched last year in Los Angeles, new zones were made available to customers on Tuesday in Boston, Houston and Miami. A dozen more will go online next year, AWS said in a statement.

Related:Why AWS’s Hybrid Cloud Play Is Different, and What It Means for Colocation

In a reminder to major chipmakers that Amazon is developing cheaper semiconductors, the company disclosed new variants of on-demand processing power. Trainium, a new chip that helps train algorithms to detect patterns in data, will be available next year. AWS also said it will offer more services based on its own Graviton chips that juice data speeds -- potentially costing customers 40% less than if they used processors from Intel Corp. or Advanced Micro Devices Inc.

Amazon also introduced graphics technology using AMD chips that it said will “provide the industry’s best price performance.” Nvidia Corp. dominates the market for graphics chips used in data centers.

In comments kicking off the company’s live-streamed re:Invent customer conference, AWS Chief Executive Officer Andy Jassy said the company realized a few years ago that it would have to develop its own chips if Amazon wanted to continue to cut costs for customers. But he went to stress that “we have a deep relationship with both Intel and AMD, and we will for the foreseeable future.”

Related:AWS and Verizon Quickly Adding 5G Mobile Edge Computing Locations

The company also announced new Intel-powered computing services on Tuesday.