Amazon could be preparing to launch cloud services in India, after it emerged that the company has been buying up infrastructure from telecommunications provider Tata Communications in its home markets.
Speaking to Techworld at the Tata Global Media and Analyst Summit in Dubai this week, the company's chief technology officer (CTO) John Hayduk said that competition from big cloud providers like Amazon and Rackspace in emerging markets is “not there yet,” but is expected to ramp up over the next 12 months.
“Some of those service providers like Amazon, they buy co-lo [co-location] and network from us, so we've seen purchases in our own facilities that are of the size,” said Hayduk. “There's only one answer to what they're going to do with that space.”
Amazon was contacted for comment, but said it does not comment on rumour or speculation.
Tata Communications is currently one of the top two cloud players across India and Singapore, offering a combination of co-location, infrastructure-as-a-service (IaaS), software-as-a-service (SaaS), IT managed services and content delivery network.
Cloud adoption in these markets is not nearly as aggressive as in developed countries. However, Hayduk said that five years down the line, service providers that do not have a compute and storage offering to sell alongside the network could be significantly disadvantaged, and that is why Tata has decided to invest in public cloud.
The company's CEO Vinod Kumar said that telecommunications companies have a “right to play” in the cloud market, because they can offer connectivity, scalability and security, as well as the “hard assets” of data centres and network. However, he warned that there are still significant risks around cloud profitability.
“Cloud is a space where everybody is converging,” said Kumar. “You have the IT guys making their services available on a cloud model, you have systems integrators coming in, and you have the telcos coming in. Over time we'll have to see how the economics shape up, and how the tussle between how the profitability pie gets shared between all these players.”
John Landau, senior vice president of technology and services evolution at Tata, said that when the company wins customers with its InstaCompute cloud offering, this is normally because of the trust that has built up around the Tata brand in India. However, as the cloud market becomes more crowded, greater financial security might come from operating a wholesale model.
“We're an arms merchant,” he said. “If Amazon has five choices to get into India, why would we not bid competitively to be one of those five, and take the money? Our shareholders would probably shoot us if we didn't because Amazon would still be in India.”
Meanwhile, with regard to offering its cloud services in more developed markets, the company it taking a cautious approach. Although it already owns data centres in the UK and US, it is waiting until the demand for portability from its existing customers grows to a significant level before rolling out services.
“We're watching the demand grow across India and Asia, as we serve the needs of emerging companies wanting to go into a developed market, so we would expand based on that,” said Hayduk. “We thought that we would have had to put pods in the UK and US by now, but so far there hasn't been a glaring need for that yet.”
Amazon made its first move into the Indian market earlier this year, with the launch of its shopping website Junglee.com. Analysts put the size of India's e-commerce retail market at about $10 billion.