AWS re:Invent LAS VEGAS — Day 1 of AWS re:Invent was highlighted with the announcement of AWS Private 5G. Day 3, the company added another network service, with the release of AWS Cloud WAN. The new product is a managed wide area network (WAN) service that simplifies and speeds up the process of deploying and managing a global network that connects corporate locations and cloud environments.
Like all AWS services, Cloud WAN is designed to be managed through the AWS portal, which has become a single pane of glass to manage the “full stack” of AWS services – from the network through application. Through the console, IT pros can configure connections to all company locations including branches, data centers, headquarter locations as well as Amazon Virtual Private Clouds (VPCs) though a graphical interface.
Businesses will connect into the network through a VPN or direct connection for last mile and then will have access to the AWS network footprint. In actuality, AWS customers have been using the network already for setting up transit gateways or cloud connection, but this can now be extended to some or all of the corporate network. During a call with AWS Product Manager Anoop Dawani, he told me some customers have been building their own networks using the AWS network, but they had to configure their own SD-WAN connections to make it work.
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With Cloud WAN, the process is simplified down to a couple of clicks or even though APIs where an application or service might be able to invoke a virtual connection. For example, if a business does a large data transfer once a month, the app could invoke a virtual direct connection between the two locations, send the data and then terminate it when the process is done.
The rise of distributed clouds, combined with containers and microservices is making workloads and applications much more ephemeral in nature requiring connectivity that is equally ephemeral. Legacy networks are not nearly dynamic enough to meet the needs of a business running modernized clouds, so AWS is building a service to change the network. While not known as a network provider, AWS has a very sophisticated network that’s highly available with per region fault isolation built into it and those benefits would be passed on to the customer.
Friends or enemies with telcos?
During my call with Dawani, I asked him if he felt this was competitive with the traditional telcos, most of which are partners of AWS, and he told me no. The initial use case for a product like this would be for the customer to continue to use their existing telco network for the primary network and use AWS Cloud WAN for offload, backup connections or alternative paths. In this case, the telco networks would still be managed through the AWS console in a “bring your own carrier” model, making the console the single control point for the global network.
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While I agree with Dawani that this is complementary in the near term, I can see a scenario where AWS starts to take share from the telcos making them direct competitors. This model is nothing new to AWS, who has hundreds of competitors to its own products running in its Marketplace, and they let customers choose the best products. For example, in the contact center, AWS has its own Connect solution, but Talkdesk, Genesys and Vonage all run on the AWS cloud and are available for customers to purchase. I’ve talked to all the vendors involved about this and they say it’s a good thing as it gives customers choice and its incumbent on the vendor to make sure their product is better than the other ones.
For telcos, this kind of “co-opetition” is new as many have a near monopoly in some regions, which is why this group of companies isn’t known for their innovation. It will be interesting to see how the network operators respond. I do know, now that AWS has jumped into networking, it will continue to deliver innovative features that improve network reliability, make it easier to operate and improves application performance. Some will embrace this, change their operating model and benefit from this. I suspect many won’t and will view AWS as a bigger threat.
While Cloud WAN may be negative to the service providers, it should be a positive for its SD-WAN partners, which include Aruba, Cisco, Palto Alto Networks and VMware. AWS told me it has no intention of getting into making SD-WAN appliances but would rather leverage partners. Customers will be able to manage these appliances through the AWS Console as well as the network services.
Consumption pricing
The other interesting part of Cloud WAN is the pricing model. Like all things AWS, Cloud WAN will have a consumption-based pricing model. The Cloud-WAN site shows there are three pricing factors – the number of cloud network edge (CNE) locations deployed, the number of attachments to each CNE and data processing charges for traffic sent through each CNE. Once A CNE is deployed, customers pay $0.50 USD per hour of connectivity and then an hourly fee for each attachment. As one would expect, data is charged on volume of data passed across the network. This is a new type of pricing model for telecom services and should result in customers paying less, since the current telecom industry is based on a flat fee up to a certain capacity.
The interest AWS has shown in networking is a signal that the network is a strategic asset and the choice of network, the way it's configured and how it runs matters to the business. I recall several years ago, the head procurement officer for a Wall Street firm said of telcos, “They’re all the same, I just choose the cheapest option.” He wasn’t alone in that thinking at the time, but the network has changed. In a recent survey I conducted, 58% of business leaders believe the network has increased in strategic value since the start of the pandemic.
AWS entering a market has been a catalyst for change in almost every market it enters. Although it has created pricing pressure, the ability to buy things on a consumption basis and make it available via a cloud model has let people deploy more things in more places. Usage of storage, compute and area of IT are at an all-time high, and that has been good for the industry as a whole, although bad for vendors that don’t embrace change. Let’s see if it can do the same for the network.
Zeus Kerravala is the founder and principal analyst with ZK Research. He provides a mix of tactical advice to help his clients in the current business climate and long-term strategic advice. Kerravala provides research and advice to end-user IT and network managers, vendors of IT hardware, software and services and the financial community looking to invest in the companies that he covers. He can be reached at [email protected], and follow him @zkerravala and on YouTube.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.