New AWS CEO Garman Needs to ‘Catch Up on the AI Side,’ ‘Get Better With … Enterprise’

Matt Garman is well positioned to lead AWS into its next phase of growth — but there is work he needs to do to retain the company’s slot as the world’s largest public cloud computing provider.

That’s the takeaway from two industry analysts and a cloud managed service provider in the wake of this week’s surprise news that Adam Selipsky is leaving as head of AWS. Selipsky stepped in in 2021 amid the COVID-19 pandemic when his predecessor, Andy Jassy, was named CEO of Amazon.

Selipsky came from Tableau; while he was an outsider, he had worked at AWS for 11 years alongside Jassy. Still, the appointment of an external CEO pointed to a gap in AWS’ strategy: “There was no successor ready inside the AWS exec ranks,” Holger Mueller, principal analyst and vice president of Constellation Research, told Channel Futures this week.

As a means of preventing that possibility from recurring, AWS has been grooming Garman ever since, he noted.

Indeed, AWS put Garman on Amazon’s high-profile “S-team,” comprising top company leaders, and that helped correct that oversight. Garman now stands ready to replace Seplisky on June 3, Scott Wheeler, cloud practice lead at Asperitas Consulting, told Channel Futures.

“His recent focus on initiatives like AWS' commitment to digital sovereignty indicates his capability to lead AWS in addressing complex regulatory and compliance issues, which are increasingly important for cloud services on a global scale,” Wheeler said.

Still, that doesn’t mean analysts and MSPs don’t have some advice for Garman as he takes over at AWS.

When it comes to what AWS needs to do better, sources have some advice.

Mueller, for his part, advises Garman to get AWS to “catch up on the AI side” and “get better with the enterprise.”

Oracle and Microsoft, he added, have known the enterprise space longer and are stronger there. 

“Developers are not the rulers in the AI era anymore, so AWS needs to change,” he said.

Wheeler agreed. 

“Microsoft has an edge in this area,” he said.

To figure how best to advance AWS, Wheeler added, Garman — who has worked at AWS since 2006 — should be aware of how easy it is “to get caught up in the company's ‘groupthink.’”

“I suggest that he look for new perspectives on how AWS works with customers and partners as it moves from high growth to the mature phase of its business,” Wheeler said.

To that end, Wheeler points out the following areas where Garman should focus: AI, quantum computing and edge computing; R&D investment; more aggressive marketing and branding to emphasize AI, security, reliability and innovation.

On top of that, he said, AWS needs to use its partnerships better, he said.

“Partnerships have always been a weak area with AWS as compared to its competitors,” Wheeler said. “Developing strategic partnerships with software vendors, system integrators and professional services firms can extend AWS's reach and capabilities. These partnerships can help AWS penetrate new markets and provide integrated solutions that are easier for customers to adopt.”

Speaking of partners, find out how sources gauge the impact of the Selipsky-Garman change.

When it comes to how Garman’s takeover might affect MSPs and similar partners, Mueller predicts no waves. Neither does Anurag Agrawal, head of research firm Techaisle.

“The leadership change should not worry channel partners,” Agrawal told Channel Futures. “On the contrary, from my multiple conversations with AWS partner teams, channel partners and Techaisle data, we observe AWS increasing its focus on a broader range of partners, such as MSPs with specific specializations, rewards and partner marketing. We may witness more growth in cloud marketplaces with partners and a partner ecosystem as the fulcrum.”

Wheeler agrees. 

“As Garman was a leading candidate when Jassy moved to Amazon in 2021, I believe this appointment indicates that they believe in their strategy but may not believe in Selipsky’s leadership,” he said. “For this reason, I believe AWS will continue as it has been, and I don’t expect many big changes. If that turns out to be the case, I don’t see AWS reinvigorating their growth as compared to the other cloud vendors, specifically Microsoft.

As for Selipsky’s legacy, sources hold general praise for how the CEO handled cloud computing demand during the pandemic. Of course, that’s when global organizations frantically turned to cloud computing as means of supporting business when governments enforced lockdowns. AWS and its rivals experienced unprecedented growth during the 2020-2022 period. Selipsky’s guidance “was essential in managing these turbulent times,” said Agrawal. 

“He shifted the organization from developer-oriented to customer-oriented. Under his supervision, AWS made a strategic choice that aimed for the long-term benefit for its customers. He launched initiatives to help AWS customers reduce their spending on AWS services, even if it meant giving up some short-term revenue for AWS itself. This customer-focused approach concentrated on building trust and loyalty for lasting success.”

Even so, that doesn’t mean Selipsky did everything right.

“Sadly,” Agrawal added, “he was blindsided by the GenAI wave unleashed by OpenAI. However, he doubled down and re-launched Amazon Bedrock and introduced Amazon Q.”

Other Selipsky accomplishments include implementing initiatives such as the partner growth rebate and originated discounts, as well as the expansion of the AWS Marketplace for partners, Wheeler said.

Now, he added, it’s time for Garman to find ways to keep AWS in the hyperscaler lead.

“AWS seems to have transitioned out of growth to the maturity stage of its business cycle, and its growth over the next 6-12 months will either confirm or disprove that,” he said. “If true, this is an issue for AWS as the cloud sector is still in its growth cycle, with other cloud vendors (Azure, Google) growing their businesses at 25%-30% annually.”

Speaking of cloud growth, Alkira, which specializes in multicloud networking support, just closed a $100 million Series C funding round.

That brings the company's total funding raised to $176 million. 

Tiger Global Management led the round, with additional investment from Dallas Venture Capital, Geodesic Capital and NextEquity Partners; and participation from existing investors Kleiner Perkins, Koch Disruptive Technologies and Sequoia Capital.

"The explosive growth of cloud applications and AI workloads are fueling a surge in demand for agile, secure, scalable cost-efficient networking solutions," said Amir Khan, CEO at Alkira. "We're fortunate to have strong partners to help us meet that demand.”

And not to make this cloud computing roundup too AWS-heavy, but the hyperscaler is touting its new, multibillion-euro investment in its sovereign cloud service in Germany.

AWS will roll out its first region around this in Brandenburg by the end of next year.

“AWS’ long-term investment is expected to lead to a ripple effect in the local cloud community, through accelerating productivity gains, empowering the digital transformation of businesses, empowering the AWS Partner Network, upskilling the cloud and digital workforce, developing renewable energy projects and creating a positive impact in the communities where AWS operates,” the company wrote in a May 14 blog.

By 2040, AWS expects to have contributed 17.2 billion euro to Germany’s total gross domestic product.

A new report from The Motley Fool indicates that indie cloud provider DigitalOcean could be in store for an upswing. 

Because it mainly serves small and very small businesses and developers, DigitalOcean has seen slower growth in recent months as the economy has slowed. Yes, revenue is increasing,  but the company is experiencing churn and its existing customers aren’t expanding what they buy.

Still, writes Timothy Green, DigitalOcean could be on the verge of a turnaround. It’s adding customers (and it does sell through channel partners) and the acquisitions of Cloudways, Paperspace and SnapShooter seem to be paying off. Alongside that, DigitalOcean is launching high-value services and investing in AI infrastructure.

“DigitalOcean's results are sensitive to economic conditions, but the company fills an important niche in the cloud computing market,” Green wrote, advising that long-term investors consider buying the provider’s stock.

A new report from The Motley Fool indicates that indie cloud provider DigitalOcean could be in store for an upswing. 

Because it mainly serves small and very small businesses and developers, DigitalOcean has seen slower growth in recent months as the economy has slowed. Yes, revenue is increasing,  but the company is experiencing churn and its existing customers aren’t expanding what they buy.

Still, writes Timothy Green, DigitalOcean could be on the verge of a turnaround. It’s adding customers (and it does sell through channel partners) and the acquisitions of Cloudways, Paperspace and SnapShooter seem to be paying off. Alongside that, DigitalOcean is launching high-value services and investing in AI infrastructure.

“DigitalOcean's results are sensitive to economic conditions, but the company fills an important niche in the cloud computing market,” Green wrote, advising that long-term investors consider buying the provider’s stock.