The Amazon.com Inc. Amazon Web Services (AWS) Shield website is displayed on an Apple Inc. iPhone and iPad. (Photographer: Andrew Harrer/Bloomberg)

Amazon Targets Hybrid-Cloud Customers With On-Site Servers

(Bloomberg) -- Amazon.com Inc. will let customers put servers used in the company’s cloud-computing data centers into their own facilities, an effort to reach businesses that want to store some of their technology functions in the cloud while keeping tighter control of others.

The move announced Wednesday by Amazon Web Services Chief Executive Officer Andy Jassy helps provide hybrid-cloud strategies desired by many larger enterprise customers in an area where cloud-competitor Microsoft Corp. is making headway.

Amazon’s announcement represents a continued shift for the Seattle-based company, which once preached the mantra of moving everything to the public cloud, and a boon to VMware Inc., majority owned by Dell Technologies Inc., which is looking for ways to keep growing. The AWS hardware put into customer data centers as part of this offering will have VMware software on it. Both companies will sell the new product and share revenue, said VMware CEO Pat Gelsinger.

“It’s a pretty big statement to the industry at large -- now Amazon is going to become an on-premise hardware vendor,” Gelsinger said.

AWS announced a slew of other new or updated offerings at its cloud-computing conference in Las Vegas, seeking to maintain its lead in the market for internet-based computing.

  • Glacier Deep Archive is a data-storage service coming in 2019 that is about a fourth of the cost of Amazon’s current storage pricing, Jassy said.
  • Amazon FSx for Windows File Server is a Windows-compatible service that may help Amazon win cloud-computing customers who might otherwise shift to Microsoft’s Azure.
  • New services for machine learning, a powerful type of artificial intelligence software. AWS announced Inferentia, its first chip for drawing inferences from data, which will go on sale next year.
  • The company also unveiled a service to make it faster and cheaper to use machine learning algorithms in Amazon’s cloud.
  • Amazon Managed Blockchain, a new service that can be used to manage peer-to-peer payments, process loans and help businesses transact with distributors and suppliers.

Amazon uses the annual re:Invent conference to highlight new tools and features, seeking to stay ahead of cloud rivals Microsoft and Alphabet Inc.’s Google. The global public cloud market will grow to $278 billion in 2021, up from $176 billion this year, according to Gartner Inc.

AWS sales will reach $71 billion in 2022, which would give the division a valuation of about $350 billion, according to Jefferies analyst Brent Thill.

©2018 Bloomberg L.P.