Yahoo Finance Presents: Amazon Chief Technology Officer Werner Vogels

Yahoo Finance's Dan Howley sits down with Amazon Chief Technology Officer Werner Vogels to discuss Amazon celebrating 15 years of its cloud platform AWS as well as the future direction of the company's technology.

Video Transcript

DAN HOWLEY: We are here with Amazon CTO Werner Vogels. Thank you so much for joining us, Werner. What we want to talk about is obviously the 15th anniversary of AWS.

It's been 15 years since AWS launched. And in that time, it's basically become the juggernaut behind cloud computing. It really kind of helped put that into the public view, and now it's used by companies the world over.

Some major, major firms are using it. So I guess, you know, where did the impetus for cloud computing come from? When-- at what point did Amazon decide we want to get into cloud computing? And at this point, with rivals like Microsoft kind of nipping at your heels, how do you ensure that you stay ahead?

WERNER VOGELS: Well, let me first deal with the sort of a bit of the history there. You have to realize that Amazon was always a technology company. Even though maybe [INAUDIBLE] on the outside always saw it as a retailer, with all the things that have been pioneered by Amazon over the years or the similarities or recommendations and all these kind of things, they all take technology. And so also internally, I think if you look at the technology that we've been building, we probably were 10, 15 years ahead of what was common in the market [INAUDIBLE] scalables in parallel.

Nobody else had built an e-commerce site before, definitely not on that scale. And so we came to internally to what was called the shared services platform to support our own teams internally. But when we looked at the outside world, we saw that many, especially young businesses, also required this sort of internet scale.

And so we felt, well, you know what? We solved this for ourselves. Maybe we can turn this into a business to help other people as well.

And so it will be a double double-edged sword, you know? We're able to help other companies and still make a good business out of it as well. So 15 years ago, we launched Amazon S3, the simple storage service, the first one of a long range of services, and in the fall of that year, Amazon EC2, the compute service.

Now, in those early days, the road was called infrastructure as a service. Instead, it was compute, storage, databases, network, security, but not more than that-- really the lowest layer in the whole IT landscape. But of course, by now, it's much richer than that. We have well over 200 different services, whether it's for mobile development or machine learning or analytics or IoT. There isn't an area in the whole IT landscape that AWS doesn't cover.

DAN HOWLEY: I guess, you know, when you look at the pandemic, right, you know, we-- it's a year now since it kind of kicked off. And we saw at the outset ISPs, Internet Service Providers, struggling to keep online or ensure that their customers were able to continue to connect. Everybody was using webcams. Kids were learning from home. But AWS didn't seem to have any of those kinds of hiccups. So I guess where did the idea or the ability, rather, for Amazon to stay online come from, and, you know, at what point did people in data centers come in?

WERNER VOGELS: Well, of course, you know, as much as frontline workers get all the credit, I think our data center techs should be getting a lot of credit as well for keeping the lights on for everyone. But of course, we have a long history in building superior supply chains, and I think AWS is, of course, very fortunate to be able to learn from amazon.com, the retailer, about how to ensure that your supply chains will never be interrupted. And so adding capacity, continually adding capacity, to our 25 regions around the world is something that we continuously do but also making sure that those supply chains are as full tolerant as that compute systems are such that if certain things, you know, may disappear from your supply chain or the offering may not be what you want, we always have backup mechanisms to make sure that all our data centers and all our regions are continuously supplied.

So we're in good shape. But more importantly, I think-- if I think about the pandemic is that there were a few things that we've done which [INAUDIBLE] to call-- so we launched a number of years ago the AWS disaster response team. Basically, it's a group of engineers at Amazon that will reach out proactively to our customers if they're affected by a disaster.

And it might be an earthquake or flooding or whatever. And so we're very fortunate to have that structure in place such that we could help our customers. And of course, as a set of our customers, [INAUDIBLE] show their services explode. And [INAUDIBLE] went from, what was it, 10 million daily active participants to 300 million in half a year--

DAN HOWLEY: Yeah.

WERNER VOGELS: [INAUDIBLE] a small-- a young business that-- where students and-- high school students help each other with homework went from 1 million to 300 million users overnight almost or Netflix plus 40% or government agencies that certainly need to serve many more customers. All of those we helped to make sure that they could use economies of scale such that their costs wouldn't rise as fast as the usage would. And on the other hand, of course, we had all our customers in the hospitality space and airlines and restaurants.

And we also worked with them to reduce their costs, to make sure that they could really have a minimum cost during much lower usage. And so companies like Airbnb and Jack in the Box and whatever, all of those sort of built on our 15 years of experience helping them sort of be very solid, whether they were exploding in terms of usage or whether they had to reduce the usage significantly. Because after all, scaling is not only about scaling up. Equally important is how to scale down such that you can only use the minimum amount of [INAUDIBLE] resources that you require and not have to pay for anything more.

DAN HOWLEY: Was there a point during the pandemic where you realized that, you know, things were really taking off as far as usage from those other companies with, you know, Zoom and-- I mean, I don't know how often I watched Netflix and Zoomed at the exact same time in the past year, but it's been pretty often. So was there a point where you saw that kind of start to take off?

WERNER VOGELS: Well, pretty early on, I think. It depends, of course, on different countries. I mean, the lockdown, the situations, happened in different countries, but yeah, we could definitely see an immediate rise in the use of digital services. And actually, that hasn't gone away.

And if my predictions as far as I have a crystal ball, it will not go away. If I look at remote learning, for example, the success of it, on one hand, I think students have been frustrated by the lack of social content, the context. But they also enjoy the freedom in which they're able to actually follow rules now.

And so Ken Robinson, the world famous professor in the UK who really sort of pushed for individualized learning, remote learning, can play an extremely important role in that. And I think that will continue to go like that. But yeah, immediately reaching out to our customers that we saw, you know, immediately starting to scale, helping them to reduce their cost as well as our customers that actually were not affected or were limited affected.

But we also saw quite a few enterprising says taking the opportunity to start to innovate. Now they may have been hampered. They may have been reduced in terms of the usage but starting to think about what do we want to have in terms of digital services when we come back online again or when this is all over or if we ever return to some form of normal. And so again, our 15 years of experience there helps these companies sort of really making sure they can make effective use of these resources.

DAN HOWLEY: You know, when you look at the future of something like AWS, where do you see that going? I know that you've released your predictions for 2021 into the future. But where do you see AWS in particular going down the line? In the past, you've said that if Amazon doesn't continue to innovate, you know, it'll be in trouble in 10, 15 years. Where do you see that innovation going for a service like AWS?

WERNER VOGELS: Well, for AWS, of course, I mean-- of course, again, I don't have-- if you would have asked me five years ago where we would be now, I would probably miss the mark significantly. So this comes as a caveat, yeah? There's a few things that we already know.

You know, cloud used to be-- we used to think about cloud as something that was sort of semi-centralized, sitting somewhere, yeah? After all, we have these 25 regions around the world. But what we see is that clouds becomes closer to, let's say, the individual consumers.

So for example, with all the 5G networks popping up, you really want to have cloud in the 5G access points to have really low latency communication there. And so whether it's IoT green [INAUDIBLE] to your car, another AWS service [INAUDIBLE] where maybe the machine learning training happens in the cloud itself in the more centralized part of it-- but you know, the mobiles are being run in the individual components, whether it's in the car or whether it's at some centers in manufacturing lines. So at the same time, I think the whole sort of border between physical and digital is going to disappear.

For many of these services, we already know that. If you look at an echo device, one of the Alexa devices, there's actually not that much in it. It's just some hardware, really bare hardware.

The hardware that's in there is to ensure the privacy and security of our customers but not more than that. Everything else happens in the cloud. Yeah, and so the majority of Alexa has nothing to do with the device.

It's just an example of how you can make use of the Alexa service. And so whether that is in home automation or whether it's in factory automation, I think the distinction between physical and digital will disappear. And I mean, I can go on.

I think some [INAUDIBLE] of the areas that are probably a bit more on the edge is that of space. The expectation is that we will see a launch in the coming five years of at least 10,000 more satellites. And some of those are microsatellites. Now there's a lot of many young businesses going around that building these microsatellites that have one or two very specific functions and do low orbiting.

So for those, I'm told is built something called ground station. So they said they don't need to build their own, you know, antenna stations around the world. We just rent some antenna's time with AWS.

And I think the other area, especially for enterprise computing, is that it's quantum. Yeah, quantum computing has come to a point where it is becoming practical. And what we see with our new service bracket-- that's a larger enterprise, especially in the financial services space and in the life sciences space, are starting to experiment and try to figure out what quantum could mean for them. And so I think, you know, pretty quickly in the coming two, three years, we'll see major changes in terms of software, software support, development support there, and where the first companies are really starting to exploit quantum to significantly accelerate the work that they're doing.

DAN HOWLEY: I guess one of the places that has been just kind of interesting for me in the future and quantum computing notwithstanding being interesting-- I mean, the capabilities that are available there-- is the ability for drones, right? So I guess where do drones fit in there? You know, we have the Amazon Air that we've talked about in the past. At what point do they start to come into play, and how do they fit into the overall system for Amazon.

WERNER VOGELS: Well? I think if you think from AWS side, from the tech technology side, it's something that I already mentioned. You know, the mobiles for drone control are created in the cloud. And there's massive amounts of data and things like that.

For example, imagine a drone over your backyard. And suddenly, your dog runs into the backyard. You better not-- you don't want the drone too long at that particular moment.

Or maybe, you know, we have an old picture of your backyard. But now, suddenly you put a washing line up with laundry on it, yeah? And so all of these are [INAUDIBLE] algorithms that are created inside the Amazon-- inside the AWS cloud.

And as such, there's a continuous back and forth in terms of sort of all the innovation that's happening around drones and so that the work with machine learning and vision and all the capabilities that we're doing in AWS. So we really try to democratize machine learning. And so we all think about AI.

It's all gaga, gaga, gaga, Skynet, bad things happening. In essence, there's sort of three different layers. There's data scientists that create algorithms. And then there's-- and-- but not everybody needs data scientists, you know?

You just need-- there's a layer on top of that which we call Sagemaker that allows every engineer to start applying machine learning to its problems. And there's probably an area, for example, in AWS with security. Now security will be forever our number one priority but really being able to use machine learning to create individual security modules for each of our customers-- because each customer is different.

Each access pattern is different. And so be able to use these kind of technologies and apply them to real world problems such as security is very important. But then there is also a whole set of areas where you just want to use some video processing, or you just have a bunch of medical documents that you just want to read through and have scanned for you.

And so there's a whole slew of services that don't require any knowledge of ML or AI and actually can really make use of that. And so we will see many more companies, whether it's satellite companies or drug companies or automotive or, for example, a company in Seattle like Convoy, automated trucking-- extremely important. And so all of these are making use of these sort of high level components that AWS has to offer.

DAN HOWLEY: All right, Werner Vogels, thank you so much. CTO of Amazon-- we really appreciate you taking the time with us.

WERNER VOGELS: Thank you very much. Thanks for having me.