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Comment by JCM9 | Hacker News Reader

Except they’re struggling here. The performance of their offerings is consistently behind competitors, particularly given their ongoing networking challenges, and they’re consistently undercut on pricing.

For Amazon “renting servers” at very high margin is their cash cow. For many competitors it’s more of a side business or something they’re willing to just take far lower margin on. Amazon needs to keep the markup high. Take away the AWS cash stream and the whole of Amazon’s financials start to look ugly. That’s likely driving the current panic with its leadership.

Culturally Amazon does really well when it’s an early mover leader in a space. It really struggles, and its leadership can’t navigate, when it’s behind in a sector as is playing out here.

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Under what scenario does Amazon lose the beast that is its high margin cloud service renting? It appears to be under approximately zero threat.

Companies are not going to stop needing databases and the 307 other things AWS provides, no matter how good LLMs get.

Cheaper competitors have been trying to undercut AWS since the early days of its public availability, it has not worked to stop them at all. It's their very comprehensive offering, proven track record and the momentum that has shielded AWS and will continue to indefinitely.

It’s already playing out. Just look at recent results. While once light years ahead competitors are now closing ranks and margins are under pressure. AWS clearly isn’t going away, but on the current trajectory its future as the leading cloud is very much not a certainty.

AWS is losing marketshare to Azure and GCP. This is big deal, it was unexpected after years of Google/Microsoft trying and failing.

Further AWS is losing share at a time when GCP and Azure are becoming profitable businesses, so no longer losing money to gain market share.

Because if LLM inference is going to be a bigger priority for the majority of companies, they're going to go where they can get the best performance to cost ratio. AWS is falling behind on this. So companies (especially new ones) are going to start using GCP or Azure, and if they're already there for their LLM workloads, why not run the rest of the infrastructure there?

It's similar to how AWS became the de-facto cloud provider for newer companies. They struggled to convince existing Microsoft shops to migrate to AWS, instead most of the companies just migrated to Azure. If LLMs/AI become a major factor in new companies deciding which will be their default cloud provider, they're going to pick GCP or Azure.

Except for spending cloud budgets on LLMs elsewhere like other mentioned, LLM coding will make it easier to convert codebases from being AWS dependent, easing their lock-in

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