The industry impact of Amazon in Australia

Horror stories in Amazon’s closet

Only time will tell whether the high ground taken by Macquarie Telecom and Hostworks will protect them the rising tide of cheap, public cloud services.

Equally, integrators excited at the prospect of an AWS-fuelled sales spree should heed the cautious advice of trailblazers.

“Amazon Web Services has been good for us to a degree,” says Arthur Marinis, managing principal of Base2Services, a pioneering integrator which has been moving companies to Amazon for several years.

Over time, he said, the commodity service has proven more and more difficult to derive a profit from.

Small companies don’t want to pay a third party to migrate and implement their systems, and prefer to muddle through it themselves, he noted. Large enterprise, meanwhile, often employ IT teams that gradually learn the ropes for hosting on Amazon and migrate the rest of the company’s data centre assets themselves.

“The IT departments are empires themselves and they don’t want to dissolve those empires,” Marinis says.

Andy Pattinson, commercial director at ProQuest Consulting had much the same experience.

"IT infrastructure departments in enterprise organisations are initially cautious of AWS adoption and consider it a threat to their roles," which can lead to consulting opportunities, he said.

"But once they understand the ease of use and see the benefits of AWS they quickly skill up and take over primary responsibility for their AWS environments — this can limit long term consulting opportunities."

Other consultancies are mulling whether to scupper their AWS practices because they are too unprofitable.

Base2Services has cut back to 15 staff, focuses on mid-market app migrations and no longer does development work for Amazon because of the high level of competition.

The dust is yet to settle on Amazon’s impact, but once Rackspace arrives next year - and more large organisations take the cloud plunge - the hosting landscape is sure to look very different.