In the early days of Amazon Web Services, technical evangelist Jeff Barr was putting in long hours on the road, pitching a novel concept: rent computing power for 10 cents an hour, and storage for 15 cents a gigabyte per month — no servers to buy, no data centers to build.
Barr remembers calling his wife to check in at the end of the day. Get a nice dinner, she told him, you deserve it. But later, at the restaurant, looking at the menu and doing the math in his head, he couldn’t help but ask himself if the pennies were adding up.
“Did enough people start using these servers to buy me a decent steak?” he wondered.
He probably should have ordered the filet.
Two decades later, AWS generates nearly $129 billion a year in revenue. That’s enough to rank in the top 40 of the Fortune 500 if it were a standalone company, ahead of the likes of Comcast, AT&T, Tesla, Disney, and PepsiCo. Companies such as Netflix, Airbnb, Slack, Stripe and thousands more have built massive businesses on its platform.
When AWS goes down, it ripples across the web, taking down apps, websites, and services that most users never knew were on a common infrastructure.
But the business that defined cloud computing — bankrolling Amazon’s expansion into everything from streaming to same-day delivery — is now grappling with the most significant challenge since it launched. The rise of AI has upended the industry, empowering Microsoft, Google and others, and creating competitive dynamics that seem to change every month.
For the first time, AWS faces questions about its long-term ability to lead the market it created.
With Amazon marking the 20th anniversary of AWS this month, GeekWire spoke with early builders, current AWS insiders, and longtime observers of the company to tell the story of how the business got started, how it won the cloud, and what it’s up against now.
Scalable, reliable, and low-latency
Officially, Amazon pegs the public launch of AWS to March 14, 2006. That’s when it announced “a simple storage service” that offered software developers “a highly scalable, reliable, and low-latency data storage infrastructure at very low costs.”
Dubbed S3, it was Amazon’s first metered cloud service: the first time developers could pay for exactly what they used, billed in tiny increments, with no upfront commitment.
All of this might seem mundane in a modern world where the cloud and internet services are almost like electricity and water, seemingly always there when you need them.
But remember the context of that moment: Facebook was available only on college campuses. Netflix arrived on DVDs in the mail. The iPhone was still a year away from being unveiled. And over at Microsoft in Redmond, they were finally getting ready to ship Windows Vista.
The asterisk in the headline
The history of Amazon Web Services is more complicated than it might seem, and it’s actually a subject of some disagreement behind the scenes. There are multiple origin stories, including one offered by Amazon itself, and others by former employees who say the company has tidied up the narrative over the years to shape the lore around its current leaders.
Journalist Brad Stone, author of the canonical Amazon book, “The Everything Store,” discovered this when Andy Jassy — the longtime AWS CEO who would go on to succeed Jeff Bezos as Amazon CEO — disputed aspects of his telling of the AWS story in a one-star review.
One point of contention: the origins of EC2, the AWS service built by a small team in South Africa, and the degree to which it sprang from the process Jassy led or was born independently.
Part of the challenge: Amazon, despite operating the storehouse of the internet, isn’t great at preserving its own history. The company, which cooperated with this piece, wasn’t able to unearth key documents such as Jassy’s original AWS six-pager from September 2003.
Some former Amazon leaders take things further back, to a set of e-commerce APIs that Amazon released in July 2002, allowing outside developers to access its product catalog and build applications on top of it. By that accounting, AWS is closer to 24 years old.
Overcoming internal opposition
The effort was led by business leader Colin Bryar, who ran Amazon’s affiliates program, along with technical leader Robert Frederick, whose Amazon Anywhere team (focusing on making Amazon’s site and features available on mobile devices) had been working since 1999 on internal web services that became the foundation for the external APIs.
Amazon in those days was on Seattle’s Beacon Hill, in the landmark art deco Pacific Medical Center tower overlooking downtown. Jeff Bezos was directly involved from the early days, as a believer in the vision that Amazon’s infrastructure capabilities could become a big business.
In 2002, when Bryar initially pitched a roomful of senior leaders on the idea of opening up Amazon’s product catalog and features as web services to outside developers, nearly all of them said no, as Frederick recalled in a recent interview.
The objections piled up: it would cannibalize existing business, it would educate competitors. Then, as Frederick remembers it, Bezos looked around the table and let out one of his trademark piercing laughs. Amazon’s founder wanted to see what developers would do.
“Let’s do it,” Frederick recalls Bezos saying, “and let’s have them surprise us.”
Later, in a July 2002 press release announcing “Amazon.com Web Services,” Bezos used nearly identical language: “We can’t wait to see how they’re going to surprise us.”
Big developer response
Within months, tens of thousands of developers had signed up. Increasingly, they were asking for things like storage, hosting, and compute, recalled Frederick, who worked at Amazon through mid-2006. He went on to found IoT platform Sirqul in 2013 and remains its CEO.
Another veteran of those early days agreed that the developer response to those initial e-commerce APIs may have opened the minds of Amazon’s leaders to the larger possibilities.
“Maybe that’s where Andy’s brain lit up. … Maybe that’s where Jeff’s brain lit up,” said Dave Schappell, referring to Jassy and Bezos. Schappell arrived at Amazon in 1998 as Jassy’s MBA intern, dropped out of Wharton to stay, and spent the next seven years working with him.
Schappell ran the associates program after Bryar, became an early head of product for AWS, and hired the original product managers. Those product managers included Jeff Lawson, who went on to found Twilio. Schappell himself became a well-known Seattle entrepreneur before returning to AWS for four years after Amazon acquired his startup TeachStreet.
The ‘crystal-clear movie moment’
Jeff Barr was one of the developers who noticed.
Now an Amazon VP and longtime AWS chief evangelist, Barr was working as an outside consultant in the web services field when he logged into his Amazon Associates account one day in 2002 and noticed a new message.
Amazon now had XML, it said, referring to the data-formatting standard that allowed software systems to communicate over the internet. Amazon was making its product catalog available as a web service and connecting it to the affiliate program, a surprising move at the time.
“I clicked through, I signed up for the beta. I downloaded it right away,” Barr recalled.
He sent feedback to the email address in the documentation. They actually replied.
Before long, he was invited to a small developer conference at Amazon’s headquarters — maybe four or five attendees at the Pacific Medical Center tower, in a semicircular open space with a view of the city. The developers sat in the middle, with Amazon employees around them.
At some point, one of the Amazon presenters announced that they were so impressed at how developers had found the APIs and started publishing apps within 48 hours that they were going to look around the rest of the company for more services to open up.
“That was that crystal-clear movie moment,” Barr said. He turned to an Amazon employee nearby and told her: “I have to be a part of this.”
Creating the cloud
But what Frederick and team had built was essentially a way for outside developers to access Amazon’s product data. It was not yet the cloud as we know it today.
That move started in mid-2003, as Jassy told the story in a 2013 talk at Harvard Business School. Jassy, then serving as Bezos’s technical advisor, was tasked with figuring out why software projects across Amazon were taking so long. It turned out that engineers were spending months building storage, database, and compute solutions from scratch.
In a meeting of six or seven people that summer, someone made the observation that would change the company’s trajectory. Jassy recalled the thinking during his HBS talk: “We’re pretty good at this. And if we’re having so many problems, and we don’t have anything we can use externally, I imagine lots of other companies probably have the same problem.”
Around the same time, Amazon recruited Werner Vogels, a Cornell distributed systems researcher, as its chief technology officer. He almost didn’t take the call. “It’s an online bookstore,” he recalled in a LinkedIn post last week. “How hard could their scaling be?”
But the company was wrestling with every problem he and his colleagues had been theorizing about — fault tolerance, consistency, availability at scale — live in production, every day.
Fundamental building blocks
Schappell remembers those early days as a non-stop cycle of six-page memos and meetings with Jassy and Bezos, all focused on trying to figure out what to build.
The concept that would define AWS — breaking every capability down to its most basic building block, or “primitive” — didn’t arrive fully formed. “I don’t think he said that on day one,” Schappell said of Bezos. “I think he said it after he read 47 of our six-pagers.”
Each primitive would stand on its own, and customers would pay only for what they used, billed in tiny increments. It was a direct rebuke to the licensing models of companies such as database giant Oracle, where customers paid for everything whether they used it or not.
Rahul Singh, who joined AWS in January 2004 as one of its first engineers, recalled the early technical plans going through just one layer of review before reaching Bezos and Jassy. (It’s the kind of streamlined decision-making that Jassy is now trying to restore across the company.)
Fault tolerant by design
In one early meeting, Bezos told the engineers he wanted a server touched exactly twice: once when installed in the data center, and once years later when it was pulled out. In between, nothing. The software had to be built to tolerate failures, leaving dead machines behind and moving on. It was a philosophy that would define the architecture of the cloud.
On Singh’s first day, his manager Peter Cohen sat him down in the lunch area and handed him a planning document (a “PR/FAQ” in Amazon lingo) that had just been approved by Bezos.
“We’re calling this S4,” Cohen said. Singh looked at the name of the product, Simple Server-Side Storage Service, and pointed out that it should be called S5. Singh recalls Cohen’s response: “Yeah, you’re really smart, aren’t you? Let’s see if you can actually build this.”
It was eventually shortened to Simple Storage Service, or S3.
The queuing service called SQS had launched in 2004 in beta (adding further to the debate over the origin story and what counts as the launch) but S3 was the first made generally available.
A billion-dollar business?
Jassy, then the VP in charge of AWS, would hold all-hands meetings in a conference room for four or five engineers, most of them straight out of college and grad school, as Singh recalled in an interview. Jassy ran them with the discipline of a much larger organization, repeating over and over that AWS could be a billion-dollar business, at a time when it had no revenue at all.
Singh remembers being highly skeptical.
“I was young and naive, and I remember thinking: a billion, that’s a really big number,” Singh said. Years later, he would joke with Jassy that the prediction had been completely wrong: it turned out to be a multi-billion dollar business, many times over.
In a LinkedIn post marking the March 14 anniversary, current AWS CEO Matt Garman — who joined the company as a summer intern in 2005, before the launch of S3 — recalled how early customers like FilmmakerLive and CastingWords took a bet on the fledgling platform.
“That shift changed the economics of building technology almost overnight,” he wrote.
Meanwhile, in Cape Town …
While one team was building S3 in Seattle, the compute side of the equation was taking shape 10,000 miles away. Chris Pinkham, an Amazon VP who wanted to move back to his native South Africa, was given permission to set up a development office in Cape Town.
His small team built EC2 — the Elastic Compute Cloud — largely independent of the Seattle operation. The local tech community was a bit bewildered by what Amazon was doing.
“We knew this bookstore had arrived in town,” recalled Dave Brown, who was working at a local payments startup at the time. He asked his friends who had joined what they were doing.
“It’s kind of like, you know, you can rent a computer on the internet,” they told him.
Brown asked about the revenue. “Tens of dollars every single day,” they said.
He remembers wondering why they were wasting their time on that.
The answer became clear when EC2 launched in August 2006, five months after S3, adding compute to storage as another fundamental building block of AWS and the cloud.
Early customers showed EC2’s range: a Spider‑Man movie used it for rendering, and Facebook apps like FarmVille and Animoto spun up instances on demand, as Brown recalled.
A New York Times engineer used a personal credit card to run optical character recognition on the paper’s scanned archives over a weekend, making the entire archive searchable, after being told by the company that it would be cost-prohibitive using traditional approaches. It cost a grand total of a couple hundred bucks, even after initially screwing up and doing it over again.
Typing ahead of the characters
Brown joined in August 2007, the 14th person on the EC2 team. They worked out of a tiny office in Constantia, the winelands part of Cape Town, across the highway from vineyards.
They occupied part of one floor of an office building. There was one conference room, and two offices. The rest was open plan. The team was 14 engineers, one product manager, and Peter DeSantis, the leader who came from Seattle to help build the service.
The internet connection was a four-megabit DSL line shared by the entire office, with 300 milliseconds of latency to the data centers in the U.S. When engineers typed on their screens, each character had to make the round trip across the ocean and back before it appeared.
“You get really good at typing ahead of where the actual characters are appearing,” Brown said.
Every morning, someone had to find the VPN token to get the office online. It lasted about 10 hours before it automatically reset. “Everybody would be shouting, where’s the VPN token?”
Scrambling to keep up
One day, they were running low on computing capacity. DeSantis came out of his office and told the engineers to shut down the machines they were using for testing. That freed up enough capacity to keep the service going for a few days until the next racks of hardware came online.
Marc Brooker, now an AWS VP and distinguished engineer working on agentic AI, joined the EC2 team in Cape Town in 2008. He could see the entire team from his desk. When Brown was away one day, Brooker and the team covered every surface of his office in sticky notes — the kind of prank that only works in a small office where everyone knows everyone else.
Brooker was drawn in by something he heard about in his job interview: the team had built a way to make a distributed system look like a physical hard drive to the operating system.
“Wow, that is so cool,” he recalled thinking. “Here’s 20 other things I can think of that we could do with that kind of technology.”
That instinct, that the building blocks of the cloud could be combined and recombined in ways no one at Amazon had imagined, was at the core of what made AWS catch on.