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How Amazon Swooped in to Own Cloud Services

Though Amazon practically stumbled into the cloud services game, the company has left established hardware makers in its wake
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Photographer: John MacDougall/AFP/Getty Images

In 2004, Sun Microsystems revealed a radical plan to shake up the computing industry. It would build a series of large data centers and sell access to the computers inside them for $1 per hour. Sun was taking a huge risk. It would begin a shift from selling high-profit hardware outright to becoming more of a grunt, renting computers. The company famous for wining and dining customers to close multimillion-dollar hardware orders would begin processing credit-card payments.

Sun’s plan proved too radical. The U.S. government, which regulated the sale of large computing systems at the time, balked at the idea of allowing any old terrorist with a Mastercard to gain unfettered access to a supercomputer. Building the data centers also proved harder than Sun expected, and its so-called “grid engine” stalled. While Sun licked its wounds, something altogether unfathomable happened. The online book and decorative pillow seller swooped in and, in 2006, launched its own computer rental system—the future Amazon Web Services. The once-fledgling service has since turned cloud computing into a mainstream phenomenon and left hardware makers such as Sun (now part of Oracle), Dell, IBM, and Hewlett-Packard looking like lost souls. “One of the biggest surprises around this business has been how long it took the old guard companies to try and pursue an offering,” says Andy Jassy, head of Web services at Amazon. “None of us thought we would get a seven-year head start.”