- Amazon announces public availability of Redshift, a fast
and powerful, fully managed, petabyte-scale data warehouse
Competitive edge of the service:
Low cost, scalability and part of an integrated suite of
The clientele primarily includes enterprises and the service
could drive revenue growth in the cloud and web services
Another outage at the U.S. East data center could damage the
service's reputation among enterprise customers
) Web Services (AWS) continues to battle with Oracle (
), IBM (
) and HP (
) in the big data space as it announces
the public availability of Amazon Redshift
, a new data warehousing service. The service was first
announced at the re: Invent conference in November 2012 and
was made available in the beta phase to a select clientele. It is
positioned as a low-cost and big data-ready alternative to
traditional enterprise data warehouses. For now, Amazon
Redshift is only available in the U.S. East Region but will be
rolled out to other AWS regions in the coming months.
Like other AWS offerings, Redshift is cloud-based and charges
extremely low prices. The low cost of operating a data warehouse on
Amazon Web Services is expected to attract large corporations
looking to cut down on infrastructure, maintenance and personnel
costs associated with managing large, on-site data warehouses. We
expect the service to drive growth in Amazon Web Services revenues
in 2013. We currently estimate that Amazon earns about 4% of its
overall revenues from cloud and other web services, and we expect
the share to grow to about 5% of total revenues in 2013.
Presently, Amazon Web Services provides both IaaS and SaaS
(Software as a Service). The retailer has been expanding the
availability of its cloud products and recently launched Amazon
Cloud Drive in Spain and Italy. It competes directly
with Google (
), Microsoft (MSFT), IBM (
) and HP (
) in the cloud computing market.
Check out our complete analysis of Amazon
An Entire Ecosystem To Promote Cross Selling Of
Amazon is gradually developing an integrated ecosystem of its
cloud-based services. Redshift will enable direct integration
with Amazon S3 (a web-based data storage service)
and Amazon DynamoDB a (fully-managed NoSQL database service).
One can thus pull data from Amazon Elastic MapReduce (a web-based
data processing tool), Amazon RDS (a relational database
tool), and Amazon EC2 (re-sizable computing capacity)
using the AWS Data Pipeline (a data processing and movement
tool). The integration of the entire portfolio of web
services tools is expected to promote cross selling. We expect the
availability of services from a single provider, who will also act
as a singular point of contact, will attract firms big and small to
migrate their systems over to Amazon.
The company has already tied up with many software and
consulting companies to enable enterprises to easily migrate their
operations to Amazon's servers. Redshift supports technology from
popular providers such as
SAP, IBM, MicroStrategy, Informatica, Actuate,
and AWS has partnered with them to help customers transfer to
Redshift. We expect the inherent ease of operations and low cost
will attract enterprise users to the service and this will support
our approximately 40% y-o-y growth forecast for Amazon's cloud
Competitive Edge: Scalability of Operations And Low
Like some of its other services, the competitive edge of
Redshift lies in the ease of scaling operations and low prices.
Redshift is optimized to run data sets ranging from a few
hundred gigabytes to a petabyte or more and
is compatible with most intelligence tools. The user gets
to scale up operations through the AWS dashboard. The services are
also priced at prices less than $1,000 per terabyte per year -
one-tenth the cost of most traditional data warehousing
Amazon's dominance in the cloud services market is largely
because of the cost savings it offers to its customers. The users
save on low prices and do not have to pay for capacity they are not
using. Through the AWS dashboard, users can add and remove capacity
(computing/storage/others) depending on their most
recent requirements. Thus, the user doesn't have to pay for
redundant capacity like with other cloud service providers.
Redshift carries on the tradition and charges for the usage.
Prices are charged at an hourly rate based on the node type
and the number of nodes in the user's cluster. Besides flexibility,
the user also saves on costs and risks associated with operating an
on-site data warehouse.
Key Risk: Dependence On The U.S. East Data
Amazon has not categorically stated whether Redshift will be
based out of its U.S. East data center located in Virginia. But we
believe the service will most likely be based there as the launch
has been confined to the U.S. East region and also given its
proximity to the North Virginia data center.
The data center in question has had several
most recent was on Christmas Eve
which resulted in Netflix being unavailable across a major part of
America. Prior to this, the data center was also responsible for an
outage in October which had resulted in services such as Reddit,
Github becoming unavailable. Re-occurrence of such an outage
could potentially scare off Redshift enterprise customers.
We have a $235 estimate for Amazon which is 10% below the
current market price.
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