AWS

AWS stands for Amazon Web Services and is a business division of the online retailer Amazon. It rents out computers, storage space and software over the internet. Anyone who wants to run a website, an app or an online shop needs computers that run around the clock for that. These computers stand in large halls, so-called data centers, and belong to Amazon. The customer does not buy them, but rents them by the hour and only pays for what they actually use. This is exactly the principle meant when people talk about the cloud.

Why Amazon earns more from other people’s servers than from its online shop

AWS is by far Amazon’s most profitable business. The online shop generates much more revenue, but shipping packages is expensive. Renting out computing power, on the other hand, leaves a large share of the money as profit. In many quarters, more than half of Amazon’s profit comes from AWS. That is why investors look at this division first when quarterly figures are released.

For the rest of the economy, AWS matters because it has lowered the barrier for new companies. In the past, a start-up first had to buy expensive servers before its first user even existed. Today you start with just a few euros a month and grow with demand. Netflix, Airbnb and many banks run wholly or partly on AWS.

This dependency has a downside. If a large AWS data center fails, hundreds of well-known services are offline at the same time. Such disruptions are rare, but when they happen they make headlines worldwide. Experts call this a concentration risk: too much depends on a single provider.

From the data center to the rented graphics card

Technically, AWS consists of data centers on every continent. Each region contains several separate locations so that a power outage does not bring everything down. Customers choose the region themselves, often for legal reasons. German authorities frequently require that data stay in Europe.

On this foundation, AWS offers building blocks that can be combined like Lego. The EC2 service rents out virtual computers, S3 stores any kind of file. There are also databases, tools for artificial intelligence and much more. In total there are well over two hundred individual services. Billing is usually by the hour, by gigabyte stored, or by request.

One misunderstanding should be avoided: the cloud is not a mist in the sky. These are very real machines with power consumption, cooling and maintenance staff. The only new thing is that they belong to someone else and you control them remotely.

AWS in AI news and in everyday life

In everyday life, people encounter AWS constantly without noticing it. Anyone who streams a series, opens a learning app or buys a ticket online is often talking to an Amazon server. This only becomes visible during outages, when several apps hang at the same time.

In business news, AWS appears above all in connection with artificial intelligence. Training modern language models requires thousands of specialized chips that hardly any company can buy on its own. AWS rents out this computing power and, with Trainium and Inferentia, even develops its own chips for it. Amazon has also invested billions in the AI company Anthropic, which in turn uses AWS.

It is important to distinguish AWS from its competitors. Microsoft offers a very similar service with Azure, as does Google with Google Cloud. AWS is the oldest and largest of these three, but is slowly losing market share. When reports talk about the cloud market, they almost always mean this trio.