AWS Activate: Startup Outreach Or Rescue Mission?

Amazon CTO Werner Vogels.

One of the more oft-repeated memes about Amazon Web Services’ cloud compute and storage service is that startups love it. Why buy the hardware when you can just rent it from AWS, the conventional wisdom goes.

But one takeaway from today’s launch of AWS Activate, a new program geared to provide startup companies with resources they need to build applications on AWS, could be that startups may not be the easy get for AWS that we all thought they were.

Amazon CTO Werner Vogels’ blog post was resplendent with examples of successful startups that have made their fortunes using AWS cloud infrastructure: Instagram, Spotify, Pinterest, Dropbox, Etsy, AirBnB and Shazam, to name a few. And Vogels was positively giddy about the future.

“The democratization of infrastructure means that an internet startup in Bangalore or Sao Paulo or Manila has access to the same compute power as Amazon.com; the same durability as Dropbox; the same scalability as Airbnb; the same global footprint as Netflix. The result is we’re beginning to see more and more startups grow up in more places,” Vogels wrote.

The disconnect here is, what’s preventing the rest of these new startups from jumping on the AWS bandwagon, too? This could just be Amazon trying to accelerate the growth it already has, but there may be friction points that AWS is trying to overcome, too.

Sticker Shock

Increasingly, there are signs in the cloud community that AWS may not be the be-all-end-all for startups that it is purported to be. A recent blog entry from search engine vendor Blippex outlined its case for moving away from AWS over to infrastructure provider OVH.

Blippex co-founder Max Kossatz wrote that at first the attraction of using AWS was readily apparent. But as time went on and operating costs mounted, the Berlin-based startup was running up a big monthly bill:

For running Blippex on AWS we needed machines with at least 16 GB of memory for the databases (Mongo & Elasticsearch), so we used M1 extra large, the cheapest server with that amount of memory. This machine costs you around $340-$380 per month (depending if in the US or for example in Europe). Now you can say: use reserved instances! Ok, for a one year contract this machine would then cost around $284/month and three years is way too long for a startup where even one year can be too long. We need two of this, so make it around $700/month just for the two database servers. Then you need of course for example EBS volumes to store and to backup the stuff (sending 40+ GB every day to S3 takes quite long and is not that cheap either). Then of course Web Server, crawler, etc. so we payed around $1000/month for running Blippex on AWS.

By migrating to OVH, the search engine company was able to pare their bill down to about $225/month and, according to their tests, get a 4-5X performance gain over the AWS setup with which they started.

Signs Of PRISM Fallout?

Another reason AWS may not be the shiny lure for startups was something Kossatz alluded to in the same blog entry: for non-U.S. companies, using AWS in a “post-Snowden world” is something that is an increasing threat. European companies in particular, may have legal reasons to shift away from U.S.-based services like AWS offers.

No wonder, then, that all the potential startup locations Vogels mentioned—”Bangalore or Sao Paulo or Manila”—were decidedly not in the U.S. Given Brazil’s very open frustration and hostility towards recent revelations about U.S., and Canadian intelligence-gathering activities, the inclusion of Brazil’s largest city seems no accident.

Again, this may be AWS stoking an already-hot fire to get more startup business. But it could also be the first quiet steps in responding to a world that is becoming more hostile to cloud services based in the U.S. or seeing better and cheaper alternatives to AWS no matter where they are located.

Image courtesy of Reuters/Richard Brian.