Will Amazon Cloud Services Crush the Competition?

Cloud Services is still a very new industry and is in a very high growth phase. I was recently at Interop in New York and saw a presentation by Werner Vogels, CTO of Amazon Web Services. He gave a good presentation on the state of his services. However, what is more interesting are some of the reasons why Amazon is a leading cloud provider and how this might effect the future of this industry.

1. Size: Cloud is a service area like networking, where size matters. Larger providers like Amazon will buy more from vendors, will have more staff to manage all this, can drive to lower costs and will develop expertise in running large operations.
2. Innovation: Amazon is spending big on innovation and this seems to be paying off in areas including new features, and shoring up areas like cloud security.
3. Leverage: Amazon Cloud Services leverages the spending and expertise from other Amazon services. As these areas continue to grow and innovate, the cloud group can use this innovation and expertise also.
4. Dedication to cost reduction: This is an interesting one. Amazon overall seems to be very cost conscience and this is dripping over into their Web Services unit. So Amazon Elastic Cloud Services is also focused on continual cost reductions. If they pass some of this savings to users, this will give them both a cost and price advantage.
5. Locations: Amazon can afford to have multiple locations at large scale in different geographies. That helps in disaster recovery and load balancing.
6. Partnering with others like Oracle and SAP: Amazon has put programs in place to make sure they support software that many companies use. This will help them grow in the Enterprise Market.

So Amazon is in a strong position in the public cloud industry. Can others keep up?