New Analysis - Amazon AWS spricht jetzt Deutsch - The cloud wars reach Germany - will European customers adopt the cloud?

Not as a big surprise – it was rumored for some time – Amazon AWS today announced that it has opened another AWS region, based in Frankfurt, Germany.

So let’s digest the press release in our typical style:

SEATTLE--(BUSINESS WIRE)--Oct. 23, 2014-- (NASDAQ:AMZN) — Amazon Web Services, Inc. (AWS, Inc.), an Amazon.com company, today announced the launch of its new AWS EU (Frankfurt) region, which is the 11th technology infrastructure region globally for AWS and the second region in the European Union (EU), joining the AWS EU (Ireland) region. All customers can now leverage AWS to build their businesses and run applications on infrastructure located in Germany. As with every AWS region, customers can do this knowing that their content will stay within the region they choose. The newly launched AWS EU (Frankfurt) region comes as a result of the rapid growth AWS has been experiencing and is available now for any business, organization or software developer to sign up and get started at: http://aws.amazon.com.

MyPOV – Good move by Amazon, another continental European region was more than overdue. Ireland was a good start, but does not have the network capability like e.g. Frankfurt, which hosts one of the largest internet exchange points with DE-CIX. And that probably beat out Amsterdam, another popular European cloud data center location. Kudos to Amazon not just to announce the region to come at date xyz – but have it available for business today.

All AWS infrastructure regions around the world are designed, built, and regularly audited to meet rigorous compliance standards, including ISO 27001, SOC 1 (Formerly SAS 70), PCI DSS Level 1, and many more, providing high levels of security for all AWS customers. AWS is fully compliant with all applicable EU Data Protection laws, and for customers that require it, AWS provides data processing agreements to help customers comply with EU data protection requirements. More information on how customers using AWS can meet EU data protection requirements can be found on the AWS Data Protection webpage at: aws.amazon.com/de/data-protection. A full list of compliance certifications, and a whitepaper on how customers using AWS can meet BSI IT Grundschutz, can be found on the AWS compliance webpage at: http://aws.amazon.com/de/compliance/.

MyPOV – As usual AWS does a great job around security and data privacy concerns – which are always important – but even more sensitive in Europe and there Germany. Not surprisingly – the very first question to Andy Jassy came in regards of data security: What if the US government wants the data? Jassy responded that first of all customer need to encrypt, and only in the ‘rare’ case of a court order AWS will take action. Jassy says it has not been an issue today… Europeans will revisit and test that, I am sure. (See the link to the video below, Q&A starts at 15 minutes).

The new AWS EU (Frankfurt) region consists of two separate Availability Zones at launch. Availability Zones refer to datacenters in separate, distinct locations within a single region that are engineered to be operationally independent of other Availability Zones, with independent power, cooling, and physical security, and are connected via a low latency network. AWS customers focused on high availability can architect their applications to run in multiple Availability Zones to achieve even higher fault-tolerance. For customers looking for inter-region redundancy, the new AWS EU (Frankfurt) region, in conjunction with the AWS EU (Ireland) region, gives them flexibility to architect across multiple AWS regions within the EU.

MyPOV – A key move by AWS to right away start with two availability zones, taking away the potential next concern not to move load to the public cloud. By having two zones in Germany, AWS becomes right away viable for new (local) customers.

“Our European business continues to grow dramatically,” said Andy Jassy, Senior Vice President, Amazon Web Services. “By opening a second European region, and situating it in Germany, we’re enabling German customers to move more workloads to AWS, allowing European customers to architect across multiple EU regions, and better balancing our substantial European growth.”

Many German customers are already using AWS including Talanx, in the highly regulated insurance sector. Talanx is one of the top three largest insurers in Germany and one of the largest insurance companies in the world with over €28 billion in premium income in 2013. “For Talanx, like many companies that hold sensitive customer data, data privacy is paramount,” says Achim Heidebrecht, Head of Group IT, Talanx AG. “Using AWS we are already seeing a 75% reduction in calculation time, and €8 million in annual savings, when running our Solvency II simulations while still complying with our very strict data policies. With the launch of the AWS region on German soil, we will now move even more of our sensitive and mission critical workloads to AWS.”

Hubert Burda Media is one of the largest media companies in Europe with over 400 brands and revenues in excess of $3.6 billion. JP Schmetz, Chief Scientist of Hubert Burda Media, said of the announcement, "Now that AWS is available in Germany it gives our subsidiaries the option to move certain assets to the cloud. We have long had policies preventing data to be hosted outside of German soil and this new German region gives us the option to use AWS more meaningfully."

MyPOV – Always good if you can hit the ground running and having two known local customers and brand names as early customers. Will be great to see how fast existing German AWS clients will move to the German AWS region.

Academics in Germany were also quick to welcome the new region, “The arrival of an Amazon Web Services Region in Germany marks an important occasion for the German business and technology community,” said Prof. Dr Helmut Krcmar, Vice Dean of the Computer Science Faculty, and Chair of Information Systems at the Technical University of Munich. “We work with a number of DAX listed companies in Germany. Many have been holding off moving sensitive workloads to the cloud until they had computing and service facilities on German soil as this could help them comply with their internal processes. This new region from AWS answers this and we expect to see innovation amongstGermany, and Europe’s, companies flourish as a result.”

MyPOV – Always good to have academic endorsement in Europe, particularly Germany. If the professor says it…

More than eight years of growth

For more than eight years AWS has changed the way organisations acquire technology infrastructure. AWS customers are not required to make any up-front financial or long-term commitment. They can turn capital expense into variable operating expense, scale quickly and seamlessly by adding or shedding resources at any time, get to market much more quickly with new and critical ideas, and free up scarce engineering resources from the undifferentiated heavy lifting of running backend infrastructure—all without sacrificing operational performance, reliability, or security. This has led to many customers adopting the AWS platform in Europe and around the world.

As AWS has grown, the company has continued to focus on delivering cloud technologies to customers in an environmentally friendly way. The new AWS EU (Frankfurt) region enables customers to run on carbon-neutral power. This is AWS’ third carbon-neutral powered region.

MyPOV – Amazon has the know how to run carbon neutral, Frankfurt will be the 3rd carbon neutral location. Good move for the ‘tree huggers’ in Germany and raises the game vs. local competitors. Getting a carbon neutral stamp for cloud sites and ISVs is already a trend Europeans are looking for on web sites.

The new region adds to AWS’ existing cloud computing investments in Europe. The AWS business is supported by teams of Account Managers, Solutions Architects, Technical Support Engineers, and various other functions, helping customers in Germany, and across Europe use the cloud. Amazon also has Development Centers in Germany, Romania, and The Netherlands developing next generation technologies to support the AWS business.

>> MyPOV – Good presence by AWS, but it will need to do even more in terms of short term outreach, similar like the recently opened AWS Loft in San Francisco (I had the opportunity to attend the opening) and longer term with academic outreach.

Developers and businesses can access AWS from the new Frankfurt region beginning today, including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), Amazon Simple Storage Service (Amazon S3), Amazon Glacier, Amazon Relational Database Service (Amazon RDS), Amazon Redshift, AWS OpsWorks, Amazon DynamoDB, Amazon Kinesis, AWS CloudHSM, Amazon Elastic MapReduce (Amazon EMR), Amazon Virtual Private Cloud (Amazon VPC), AWS Direct Connect, Amazon CloudSearch, Amazon CloudWatch, AWS Elastic Beanstalk, AWS CloudFormation, AWS CloudTrail, AWS Storage Gateway, AWS Identity and Access Management (IAM), Amazon Simple Queue Service (Amazon SQS), Amazon Simple Notification Service (Amazon SNS), Amazon Simple Workflow (SWF), Auto Scaling, and Elastic Load Balancing. More details on each of these services and specific pricing for each is available at: http://aws.amazon.com/products/.

MyPOV – Could head start on services – someone needs and will dig down into what is missing and why. And AWS will have to address when the service will be available in Germany.

A number of ISV technologies are also available to customers today from the new AWS EU Frankfurt region including: Canonical, Red Hat, SUSE, Trend Micro, Twilio, Acquia, Apigee, Bitnami, Esri, Infor, SAP, and Siemens. More details on running each of these technologies on AWS can be found at: https://aws.amazon.com/marketplace.

MyPOV – Very good point, as AWS enables ISVs to address the European / German market now and allows these partners to solve data residency, privacy and performance concerns.

Jassy and Geier at the launch webcast

Analysis Points

• Germany is popular – There have been a number of announcements to open data centers in Germany – see e.g. Salesforce.com this summer (why is always Munich the location of the announcements?). It will be interesting to see if it is competitive pressure, a slowing growth in North America or a readiness by European / German companies to put their load to the cloud – or a combination of al of them.
   
• Amazon AWS has moved the bar – With the entrance of AWS in the core European markets, there will be a increased pressure on the local providers to up services and lower prices. Germans love low general retail prices (and e.g. Walmart never was successful in Germany) – so let’s see if that can be transported to the cloud pricing, too. Amazon is expected to cater to that (compatible) mind set.
   
• The enterprise cloud is coming – As recently blogged, services for enterprises and concerns of cloud usage are being more and better addressed by providers. In the Amazon AWS context the recently announced AWS Directory Services is another proof point towards this trend. 

Implications, Implications

Implications for AWS Customers

This is very good news for AWS customers who get an AWS region in the center of the largest world economic region. Come to that, we have not seen prices for the region, but given AWS nature, they will be competitive. AWS customers running other regions have now more addressable market and will help AWS sell capacity in the region for similar reasons.

Implications for AWS partners

Very good news for ISVs, too – they are now viable in central Europe and in Europe’s largest market. From an enterprise perspective I am sure some execs at e.g. Infor will be ramping up growth projections in Germany.

Implications for AWS competitors

It’s time to get a central European, and maybe even German data center. Locality matters for the cloud both from statutory, regulatory, privacy and pure performance concerns. German enterprises will push prices and AWS will help, so the ‘good times’ for local providers with rich margins are likely counted. Amazon has done the (usual) good job on security, so additional local security certifications will not be a (temporary) barrier to entry or justification to keep prices up.

Overall MyPOV

A good move by AWS to open a region in Germany. Amazon will get some great load already by moving its own retail platform to the region. Not surprisingly (from the little we know), all product dependencies of Amazon running Amazon on AWS are addressed from its products available in the Frankfurt region right now. This could have performance advantages that Amazon may exploit, all the way to its Prime streaming offerings. So let’s not forget this is not only Amazon bringing AWS to cloud customers, but also bringing Amazon directly in the largest European market. I would not be surprised if Amazon will explore new products, services and best practices in Germany before the US, exploiting high internet penetration, very good network infrastructure and the affluent Germany buyer, who enjoys a lot of free time at their hands.

On the AWS side this is a key move for Amazon to position AWS into a similar market leading position like in the US. The next quarters will show how well AWS will capture European and German businesses – as the German AWS MD Marin Geier said ‘die Wolke ist in Deutschland angekommen’ (= the cloud has arrived to Germany). But it is one thing for the cloud to be in Germany, the next one is to get German / European enterprise load on it. But one step at the time, in the meantime a key date for the adoption of cloud in Europe / Germany.

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