Speaker 1: It's been one month since the changing of the guard
Speaker 1: at the top of Amazon Web Services, with Matt Garman
Speaker 1: becoming CEO, and he joins us now for an update
Speaker 1: on how things are going and to lay out his
Speaker 1: vision for AWS, the leader in the cloud market. Missus Garman,
Speaker 1: good morning to you. Let's start with the basics. What
Speaker 1: have you spent the last thirty days or so doing
Speaker 1: and how quickly have you tried to implement changes that
Speaker 1: you think were helpful important AWS?
Speaker 2: Oh, thank you and thanks for having me this morning.
Speaker 2: It's been a great first month. I've been diving into
Speaker 2: various teams and understanding where all the teams are working on.
Speaker 2: In particular, I'm excited about the opportunity in front of us.
Speaker 2: I've spent some time sitting down with customers and understanding
Speaker 2: what's important to them. Spent a bunch of time last
Speaker 2: week in Silicon Valley talking to some small startups to
Speaker 2: understand what's going on in the general of AI space.
Speaker 2: And there's a lot of excitement about new technologies that
Speaker 2: are coming and the potential for where business as go.
Speaker 2: So I'm incredibly excited and looking forward to the business.
Speaker 1: Now we will talk about generative AI. But your background
Speaker 1: is so interesting because you've held pretty long periods of
Speaker 1: both engineering and sales responsibilities in the cloud market at AWS.
Speaker 1: You know, before we were talking about AI, the story
Speaker 1: with cloud was really clear. There was this massive total
Speaker 1: addressable market where companies all around the world had not
Speaker 1: yet transition workloads and storage to the cloud. And increasingly
Speaker 1: we're actually talking about on prem being back a little bit.
Speaker 1: Just talks to me about your strategy for going after
Speaker 1: that addressable market the basics of cloud computing.
Speaker 2: Yeah, the opportunity ahead is really enormous for the business.
Speaker 2: If you look out there and you actually talk to
Speaker 2: most customers, the vast majority of their workloads aren't yet
Speaker 2: in the cloud. Some estimates are only ten to fifteen
Speaker 2: percent of workloads have actually transitioned to the cloud. And
Speaker 2: actually we hear from customers that, if anything, they're looking
Speaker 2: to accelerate that transition to the cloud. If you think
Speaker 2: about genitive at AI or other technologies, most customers are
Speaker 2: finding that it's hard to actually take real advantage of
Speaker 2: some of these new technologies that are out there if
Speaker 2: their data is not out in the cloud. And so
Speaker 2: when we talk to a lot of customers, they see
Speaker 2: this new era of generative AI as a accelerator for reasons,
Speaker 2: to get their data in the cloud, to put it
Speaker 2: in a data lake, and to be organized in a
Speaker 2: secure and safe environment where they can actually go and
Speaker 2: innovate and deliver value for their business. And so we're
Speaker 2: actually seeing this as an accelerator. Actually, when I talk
Speaker 2: to most customers, they're trying to find ways that they
Speaker 2: can migrate more of their workloads and more of their
Speaker 2: data into the cloud faster than they ever have before.
Speaker 2: And so we think that that's a huge opportunity for
Speaker 2: AWS business. But we also think that's a big opportunity
Speaker 2: for our customers as they can gain agility and can
Speaker 2: innovate faster for their own customers once all those workloads
Speaker 2: are in the cloud and they can focus on delivering
Speaker 2: value to their own customers.
Speaker 3: Alphabet and Microsoft and IBM and all that is also
Speaker 3: see this as their opportunity too, Matt, And I'm interested
Speaker 3: as someone who basically helped build cloud as a business
Speaker 3: model back from two thousand and five, when you're intenning
Speaker 3: how you think Amazon and AWS is different at this moment.
Speaker 4: Yeah, you're right.
Speaker 2: So, and as you mentioned, I've been working in AWS
Speaker 2: since two thousand and five, two thousand and six, since
Speaker 2: we started AWS, and so if you look about where
Speaker 2: we're different, there's a couple of things that I would
Speaker 2: focus on. Number one is we have a lot of
Speaker 2: experience going and helping customers in the cloud world.
Speaker 4: And from the very beginning, when.
Speaker 2: We very first started AWS, we said Priority zero for
Speaker 2: us is security. Customers are trusting us with their business,
Speaker 2: they're trusting us with these critical workloads, and so security
Speaker 2: is first and foremost.
Speaker 4: Second is operational excellence.
Speaker 2: And so we know that for our customers, if we
Speaker 2: have to be secure and we have to perform an
Speaker 2: outstanding way, so performance security, those are the two things
Speaker 2: that we focus on. And then we think about how
Speaker 2: do we help customers innovate, And we really like to
Speaker 2: partner with our custom We want to lean in. We
Speaker 2: want to understand where their struggles are, where they're having
Speaker 2: problems with their on prem environments, or where they're slowing
Speaker 2: down because they're doing too much of the muck we
Speaker 2: call it, instead of actually innovating for their customers. And
Speaker 2: then we deliver a really rich set of services. And
Speaker 2: if you go look at AWS, we have by far
Speaker 2: the widest set of services and capabilities that allow customers
Speaker 2: of all sizes, whether they're startups or enterprises or governments,
Speaker 2: to go and innovate out there for customers. And so
Speaker 2: when you have that baseline of security and operational excellence
Speaker 2: and then you have the broadest set of capabilities, it's
Speaker 2: for many customers and most customers out there, it's a
Speaker 2: no brainer as to what's the optimal platform to go from?
Speaker 3: And so, yeah, so is that no brainer? Meaning you're
Speaker 3: still accelerating for AWS growth as we see that pivot
Speaker 3: point in the previous quarter. Are you still accelerating profits too?
Speaker 4: Absolutely?
Speaker 2: AWS is still growing faster than any other cloud provider
Speaker 2: out there on an absolute basis, and we see customers leaning
Speaker 2: in and so we see again this is such early
Speaker 2: days for the cloud. It's really is early days, and
Speaker 2: so we see massive growth and acceleration ahead of us
Speaker 2: and huge opportunity for the business.
Speaker 1: Matt, since you've been in the job for thirty days,
Speaker 1: what's your understanding of what a run rate in the
Speaker 1: billions of dollars tied to generative AI actually meaning what
Speaker 1: have you come to see across your desk? Is that
Speaker 1: being a business of Yeah?
Speaker 2: And as you mentioned, general AI is already a multi
Speaker 2: billion dollar business for AWS, and so it is a
Speaker 2: big business for us today. And when you sit down
Speaker 2: with customers, I think you look at kind of where
Speaker 2: this transition has gone. It started out called a year
Speaker 2: year and a half ago with chat GPT, and everybody
Speaker 2: thought this was a fantastic technology, and it.
Speaker 4: Is and it was.
Speaker 2: And then so the first thing that everybody did is
Speaker 2: they basically built chatbots for their website, right. And so
Speaker 2: as customers, though, are transitioning, they're trying to say, where's
Speaker 2: the real enterprise value for me? How am I delivering
Speaker 2: value to my customers? And so when again when they
Speaker 2: think about AWS, they say, I have a platform that
Speaker 2: I can build on. It's secure at the baseline, it
Speaker 2: has a bunch of capabilities that I can actually go
Speaker 2: and build value for my customers. And so we increasingly
Speaker 2: are seeing customers say, how do they get real value
Speaker 2: for their business? How are they delivering revenue growth? How
Speaker 2: are they delivering real cost savings? How are they completely
Speaker 2: transforming their business? That's just different than how anyone has
Speaker 2: done their industry before. And I think that's the real potential.
Speaker 2: Even though today it is a multi billion dollar business.
Speaker 2: I think it really is the nascent part of this
Speaker 2: technology because it's what it's capable of doing. Is progressing
Speaker 2: so quickly that I think a year two years from
Speaker 2: now you're going to see many industries out there have
Speaker 2: completely changed how they think about work, how they think
Speaker 2: about delivering value to their customers. And it's a super
Speaker 2: exciting time for innovation and for technology as a whole.
Speaker 1: For our Bloomberg television and radio audiences around the world.
Speaker 1: We're speaking with the AWSCO Matt Garman thirty days into
Speaker 1: the job. An important development your predecessor was the anthropic investment,
Speaker 1: most recently the Aqua hier so to speak of a
Speaker 1: debt labs, which is more focused on non AWS at Amazon.
Speaker 1: How much do those deals indicate that Amazons had to
Speaker 1: bring in engineering talent to work on large language models.
Speaker 2: How we think about it is the potential is massive,
Speaker 2: and we think that if you look at the AI space,
Speaker 2: there's not going to be one solution for everyone. There's
Speaker 2: not going to be one model that's perfect for all
Speaker 2: use cases. Our view is that customers are going to
Speaker 2: need a variety of capabilities, They're going to need large
Speaker 2: models to do reasoning. And the anthropic models, by the way,
Speaker 2: are fantastic, and the new claud three point five sonnet
Speaker 2: model is by far the best in the world right now,
Speaker 2: and that's fantastic and we love working with that team.
Speaker 2: But a lot of customers, we find are combining those
Speaker 2: large models with small models, and then they also need capabilities,
Speaker 2: and one of the areas that we're really excited about
Speaker 2: is agentic workloads, where models are actually going to be
Speaker 2: able to call out and do things out there in
Speaker 2: the world, real world, not just summarize data or give
Speaker 2: you information, but actually go and perform actions. And that's
Speaker 2: part of where we're really excited about the technology from ADEPT.
Speaker 4: And so we think that there's a lot of these
Speaker 4: different components.
Speaker 2: Many of them are going to be built in house
Speaker 2: and have been built in house with AWS. Many of
Speaker 2: them come from external capabilities, and we think that there's
Speaker 2: going to be a really rich ecosystem of capabilities that
Speaker 2: customers are going to want to build from. And many
Speaker 2: of them are partners with us, and many of them
Speaker 2: will provide US first party offerings.
Speaker 3: A rich ecosystem needs rich infrastructure and energy. At that map,
Speaker 3: how are you seeing the need for energy growing an aws,
Speaker 3: how are you satisfying it?
Speaker 1: Then?
Speaker 3: Much talk about nuclear for example.
Speaker 2: Yeah, it's a great point, and it does need a
Speaker 2: lot of energy, and that's why if you rewind even
Speaker 2: several years ago, we're the single largest purchaser of renewable
Speaker 2: energy in the world for many years in a row now,
Speaker 2: and part of that is we saw this coming and
Speaker 2: we've been thinking about how do we build up enough
Speaker 2: power in a sustainable way that's carbon neutral that we
Speaker 2: can support the energy needs for technology.
Speaker 4: And so.
Speaker 2: We think that that growth is going to be significant,
Speaker 2: and there's a lot of work that's going to go
Speaker 2: forward in continuing to make sure that we have enough
Speaker 2: power to power the workloads that our customers need.
Speaker 4: But that's part of.
Speaker 2: What I think we bring to the table. We've spent
Speaker 2: a lot of time getting good in this space. We've
Speaker 2: spent a lot of time thinking about how do we
Speaker 2: make sure that we have enough sustainable power, how do
Speaker 2: we make sure that we have enough components in our
Speaker 2: supply chain, and how do we manage that spend. As
Speaker 2: you mentioned, it's a pretty significant infrastructure investment. How do
Speaker 2: we make sure that we manage that in a reasonable way,
Speaker 2: so that it's good for the AWS business and that
Speaker 2: we're being responsible with how much capital we spend. But
Speaker 2: we can also grow the power footprint that the world
Speaker 2: needs in a sustainable way. I think that's an important
Speaker 2: thing of what ABS brings for people.
Speaker 3: Can I ask about therefore that profitability because there has
Speaker 3: been marked improvement in profitability, But the question is at
Speaker 3: the time of investment, are you managing this by cutting
Speaker 3: costs by alsomny having let go of people, You're managing
Speaker 3: to equate it more by just more higher pricing for
Speaker 3: these AI related services.
Speaker 2: Now we think about this business like this business will
Speaker 2: have ebbs and flows over time, particularly as we make
Speaker 2: large financial investments in the future, whether it be large
Speaker 2: investments in power or data centers or components and things
Speaker 2: like that. So the profitability of the business will go
Speaker 2: up and down over time. But long term, we think
Speaker 2: that AWS will continue to be a very profitable business
Speaker 2: for Amazon. But for us, it's all about investing in
Speaker 2: the future and making sure that we have the right team,
Speaker 2: that we have the right setup in place, and we
Speaker 2: have a long term vision of what this business is
Speaker 2: going to be. So we're not thinking about particularly short term,
Speaker 2: but we're thinking about how do we really go after
Speaker 2: that long term potential so that AABS continues to grow
Speaker 2: at a rapid rate for many, many years. And we
Speaker 2: want to make sure that we have that right team
Speaker 2: in place, we have the right infrastructure in place, and
Speaker 2: we have the right investments in place so that we
Speaker 2: can be there for customers when they need us.
Speaker 1: Now, we dedicate a lot of time on this program,
Speaker 1: covering your proprietary silicon efforts Trainium for example, So we've
Speaker 1: done that. Could we focus on Nvidia and in discuss
Speaker 1: with me your relationship with that company, how supply of
Speaker 1: their AI accelerators is, and whether you actually will give
Speaker 1: us a forecast of how many accelerators you think you'll
Speaker 1: take from Nvidia in the next twelve months or calendar
Speaker 1: twenty four.
Speaker 2: It's a great question. And Nvidia is an incredibly important
Speaker 2: partner of ours. They make a fantastic processor, They have
Speaker 2: executed incredibly well and have by far the world's best
Speaker 2: technology in this space and have for the last couple
Speaker 2: of years. And we believe that AI technologies are going
Speaker 2: to rely on Nvidia and GPUs for many years to come,
Speaker 2: and so we think that they're a super important long
Speaker 2: term partner of ours. In fact, we're getting deeper and
Speaker 2: deeper with them. Jensen has said on stage that AWS
Speaker 2: is their technology partner that they're building their own models
Speaker 2: on top of. They believe that, and they've seen that
Speaker 2: AWS has by far the best performing technolog whether it's
Speaker 2: on the network side or the availability of the GPUs,
Speaker 2: which actually is a super important part of building models.
Speaker 2: And so Nvidia trusts AWS to go and build their
Speaker 2: long term models, and we lean in on Nvidia for
Speaker 2: that too and learn about what's working well, what in
Speaker 2: the next generation technology will they need from our data
Speaker 2: centers and networking, And we really have a great collaboration
Speaker 2: there to ensure that our AI customers can jointly take
Speaker 2: advantage of the best technology that Nvidia has to offer
Speaker 2: and AWS has offer in a combination so that they
Speaker 2: can really deliver the best technology for the world.
Speaker 3: Partnerships being built. Matt Common, thank you so much for
Speaker 3: joining us today, awsk you for having mea