In our third quarter 2012 Global MW IT Index® report, valuations for companies in the U.S. IT Supply Chain industry decreased 23.3% between April 1 and November 30, 2012 - an unprecedented drop, even for a mature market segment.
As we have written before, one driver of this decline in valuations is Microsoft's decision to build and sell hardware direct to customers for the first time in its history, starting with the Surface tablet. This has, of course, caused major disruption in the Wintel partner network.
Some have argued that the Wintel ecosystem is the last of its kind - a partnership that created and sustained growth in sales, profits and value for thousands of companies for several decades.
We disagree. We believe that we are witnessing the birth of a new IT ecosystem that has the potential to surpass it: Amazon Web Services.
Amazon doesn't reveal much about AWS's size or performance, but some analysts expected total revenue last year to reach $2 billion and grow 45% or more during the next five-plus years. That would make AWS a $20 billion business by 2018.
There are three major reasons why AWS could lead the next major IT ecosystem:
- Amazon has already proven that it can build and manage a large and complex ecosystem in its retail business.
- Comments from Amazon executives, including CEO Jeff Bezos, have made it clear that their formula is to offer initial services at low cost and profit only through customer use - which opens doors for partners.
- Amazon understands that a key to its success is to build and nurture a strong ecosystem.
Some recent moves by Amazon, such as the AWS Marketplace, show Amazon is willing to move up the stack itself - which could displace some of its existing partners.
But it will be a very long time, if ever, before Amazon blows up its partner network like Microsoft did in 2012.
The emerging AWS ecosystem was the subject of an article written by Marty Wolf and recently published in CRN. To read it, click here.