Potential use of AWS - Snowball and Snowmobiles by Small businesses during COVID-19 - Case Study

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This article consists of an in-depth analysis of AWS and it's service Snowball and Snowmobile. The goal of this article is to convince small businesses to use AWS (snowballs and snowmobiles) and to create a plan in order to offer low prices to attract more and more small businesses. My analysis includes company’s Business Drivers, Business Model, SWOT Analysis (AWS & Competitors), IT Business Values – 5 Pillars, Market and Competitor Analysis, Operating Plans (Snowballs & Snowmobiles), Value Analysis, Risk Analysis, Process Value Analysis, IT Governance Plan, Marketing and Manufacturing Plans, Financial Analysis and many more.

Executive summary

Amazon Web Service (AWS) is considered as the benchmark in cloud computing. AWS provides an on-demand cloud computing platform. AWS provides virtual computing, giving capabilities of computers including CPU, GPU, RAM, hard disk and SSD storage, operating systems, networking, databases, and CRM. AWS in implemented at servers all over the world (Wikimedia Foundation, 13 Apr. 2020, Para.1). AWS offers 175 cloud computing services which include database, compute, networking and content delivery, serverless computing, analytics, management tools, IoT, customer engagement, security services, and GovCloud services (Auchincloss, Louis, n.d., para. 3-6). Cloud computing is an ever-growing market that is expected to be valued at $266 Billion by the end of 2020 and $623 Billion by the end of 2023. AWS is used by 80% of Fortune 500 Companies. In 2013 AWS generated only $3 Billion in Amazon’s revenue. And in 2019, AWS generated $232 Billion in Amazon’s revenue. It accounted for 12% of Amazon’s revenue (Richter, Felix, 11 Feb. 2020, Para. 3). AWS supplies cloud, network, and computing capabilities, and users/companies pay as much those resources they use, to AWS. AWS stands on 5 pillars which are Operational Excellence, Security, Reliability, Performance Efficiency, and Cost Optimization. These pillars are fundamentals in the dominance of AWS in the cloud market. This article analyzes these 5 pillars, its strengths, weaknesses, opportunities, and threats. This article gives insights into Amazon's operational structure with risk, value, and financial analysis. Also, changes needed for Amazon to compete in an ever-growing market with companies like Microsoft Azure, Google Cloud, IBM Cloud, Alibaba Cloud, Salesforce, and Oracle cloud are detailed in this article.

Transferring data from a company to AWS on the internet can be dangerous because of the size and location of data, security risks, and network complications. A simple file of 1MB takes about a few seconds to transfer from a device onto the internet but transferring Terabytes and Zettabytes can take much longer. When there is a lack of connection in rural areas of where there is a chance of cyberattacks, these Snowball devices which are physical rugged boxes which Amazon transfers from customer to AWS facility, comes in handy. Snowball can transfer terabytes of data in a week (Allbeury, Ted, 2013, Para. 1). You can transfer things like backups of databases, original data databases, archives, records, analytics, media contents, and many more. Snowball is very secure because it uses 256-bit encryption and tamper-evident enclosures to ensure the safety of the data and device. Encryption keys are stored in the AWS key management system and they are never stored in the device. AWS ships Snowball devices to the customer, then upon receiving them, customer can upload their data or computing recourses and ship it back to AWS to upload it to AWS’s infrastructure. Snowball has also a partner called Snowmobile. The snowmobile is a 45-foot long shipping container pulled by a semi-truck. It is only useful in transferring exabytes of data. It stores 1250 Snowballs (Amazon, n.d., Para.1). Snowball family follows all the AWS’s basic principles. All these principles of AWS, their analysis, the importance of Snowball, it’ flaws, how it should be managed, and the financial analysis of that operating plan is detailed in this article.

Analysis of the company

       1. Company Strategies, Mission, Vision, Metrics

  • Strategies: Amazon cloud strategy is to offer more than any cloud computing services which are 175 to be exact, which include database, compute, networking and content delivery, serverless computing, analytics, management tools, IoT, customer engagement, security services, and GovCloud services, to become the cloud computing pioneer and giant in the IT industry.
  • Mission: Snowball service will reach most of the small businesses in America.
  • Vision: AWS’s corporate vision is to offer most cloud computing services at low prices so that customers can find, buy, and build anything they want.
  • Metrics: AWS is used by 80% of the Fortune 500 companies. It offers 175 fully functioning cloud computing services. AWS generated only $3 Billion in Amazon’s revenue. In 2019 AWS generated $232 Billion in Amazon’s revenue. It accounted for 12% of Amazon’s revenue. AWS occupies 33% of the cloud computing market in the IT industry worldwide (Richter, Felix, 11 Feb. 2020, Para. 3).

       2. Business Drivers

  • Ease of use: AWS allows app providers, ISV’s to quickly and securely host their applications. Users can use the AWS management console to access AWS’s application hosting platform. Users can monitor billing, storage, and install workspace for remote employees at any time from any place.
  • Security: AWS is a robust platform. It provides high-level security which is much needed in today’s cybercrime environment. AWS offers data encryption, monitoring, end-to-end encryption. It also conducts regular audits to match the upmost standards in data security (Hild, Stefan G.,2000, Para.3). AWS offers various layers of physical and software security. It also offers SSH key compatibility which provides a high level of web security. Snowballs are very rugged and secure because they were designed to be used in war zones (Allbeury, Ted, 2013, Para. 1).
  • Scalability: AWS tools allow users for auto-scaling and elastic load balancing which can scale up or down any applications, network bandwidth, network traffic on user’s demand. Users have Amazon’s infrastructure to compute and store data and files whenever they want. Users can scale Snowballs as much they want as per their needs.
  • Reliability: Amazon is a technological giant valued over billions of dollars with revenue and profits well over billions. Amazon has been a trusted vendor for more than a decade. Therefore, you can be sure to trust Amazon and it’s the robust and technologically advanced infrastructure for your business and company needs.
  • Cost-effective: When using AWS, the user pays for only the stuff they use. This model is called pay-as-you-go. Meaning, users have to pay for computing power, storage, and other resources as they use it. There is no long-term contract (except for Snowballs and Snowmobiles), so you are not obligated to Amazon. This makes use of AWS “Bang for your buck” meaning users will get most for their money at all times.

       3. Business model

AWS uses the platform business model. In the platform business model, money is generated by doing transactions between people, groups, and users by tapping into network effects (Cuofano, Gennaro,3 June 2019, Para. 1). Network effects are a model where more users join a network, the value of services offered by platform improves. The network effect is very critical for digital business, like AWS. Digital businesses manage and control platform as similar to physical businesses manage assets and inventory (Cuofano, Gennaro,30 August 2019, Para. 1). The platform business model depends on demand and supply. AWS uses direct network effects where Amazon manages the network and provides services and gets money as per usage. AWS’s business model (Business Model Navigator, n.d., para. 1) has the following patterns which are business model components, which are reusable and used for generating a new business model:

  • Add-ons: AWS gives new customer free credits to use its services for a specific amount. After that that when the user is used to AWS and needs more capacity to carry out their functions, the user pays for how much they use.
  • Auction: AWS offers competitive bidding for computing power called “spot instances”. Amazon EC2 instances offer the same compute power for discounted prices which let users get more application to compute power for less money.
  • Cash machine: AWS also offers “reserve instances” along with on-demand instances. Reserve instances is a service where user can get a subscription for month or year so that they can get discounted prices of up to 75%.
  • Digitization: It is the core fundamentals of AWS where the user uses Amazon’s servers virtually instead of investing and spending on their servers. So, they can save money.
  • Availability: AWS’s cloud computing power is available 24/7, 365 days a year. Because of this high availability, Amazon can sell services at premium prices.
  • Customer data: AWS collects customer data to enhance the user experience by doing analysis. AWS suggests more features for users based on their usage.
  • Pay-per-use: This model lets users pay only for what they are using. Computing power prices are given according to the user’s usage. Therefore, the user gets more for their money.
  • Self-service: User can set their cloud computing without needing help from AWS only by following instructions and documentation from AWS (Business Model Navigator, n.d., para. 1).
  1. Tools:
  • SWOT Analysis (AWS)
  1. Strengths: Amazon web services’ strengths include a strong brand name with a valuation of $125 Billion in today’s market only after Apple and Google. AWS’s pay-as-you-go model attracts more customers in using AWS’s services i.e. 300 Million active users. AWS’s regular innovation sets them apart from their competitors. AWS offers services more than any other cloud service provider. Those services include database, compute, networking and content delivery, serverless computing, analytics, management tools, IoT, customer engagement, security services, and GovCloud (Auchincloss, Louis, n.d., para. 3-6). AWS has great distribution and sales network. Also, it has high profitability and revenue stream which was $232 Billion in 2019 which was 12% of Amazon’s revenue.
  2. Weaknesses: Some users or organizations may find AWS user interface and system complicated than other competitors. Users find it confusing to choose between dozens of services offered by AWS. AWS is a public cloud that can be a turning point for many companies. Some users may find price structure more pricy than other services if their usage is low. Profitability can be in question for the future as there is a rise of other cloud services that want to take AWS place in cloud services.
  3. Opportunities: AWS can make use of the ever-growing cloud market as more and more companies are moving towards the cloud. It is a $300 Billion industry, where AWS is currently dominating but can take over everything if they can offer fewer prices for less usage and more services. More service offerings can confuse some people but can be a great source for more revenue. Investments will be more as the cloud revolution continues.
  4. Threats: Increasing hardware prices makes profit margins low. Rise of aggressive competitors like Microsoft Azure, Google Cloud, IBM cloud computing, Oracle cloud, Verizon wireless, and Salesforce, can be threatening. Private cloud is a threat to increasing trust issues between government (NSA) and people. People want more privacy with a private cloud which can affect AWS’s market share. Cybercrimes are affecting AWS’s profitability where the US government is increasing enforcing new regulations every year because cybercrime costs the country approximately $100 Billion per year (Chu, Bessie, 4 November 2013, Para.1).
  • IT Business Values – 5 Pillars

According to Amazon (Engdahl, Sylvia, 2008, Para.1), 5 pillars of Amazon web services and Snowball are Operational Excellence, Security, Reliability, Performance Efficiency, and Cost Optimization. These pillars are fundamentals in the dominance of AWS in the cloud market. A detailed explanation of these 5 pillars are as follows:

  1. Operational Excellence: The operational excellence pillar means the ability to deliver business value by smoothly running and monitoring systems regularly. AWS has mastered this ability and it uses this ability to regularly improve processes and procedures. AWS uses automation to help with routinely monitor those said systems and services.
  2. Security: Cloud security is of utmost importance in the cloud. It can make or break a cloud service provider. The security pillar refers to the ability of a company to secure and protect information, assets, and systems while delivering said business value. AWS provides security through mitigation strategies, risk assessment, and detective controls.
  3. Reliability: The reliability pillar includes a measure for recovering from infrastructure and system disruptions. A best in the business system means a well-defined system that is robust enough to handle constant changes and has a monitoring system in place.
  4. Performance Efficiency: Performance efficiency refers to meeting demands and providing services and solutions. Performance Efficiency pillar refers to how to use computing power to meet company and system requirements. It also applies to keep up with constant changes in demand and technological evolution.
  5. Cost Optimization: Cost Optimization pillar refers to the ability of a company to avoid and eliminate unnecessary expenses and resources (Engdahl, Sylvia, 2008, Para.1).

Market and Competitor Analysis

      1. Industry Environmental Scan

The Cloud computing market is ever-growing. The US spent $124.6 billion, China spent $10.5 billion, the UK spent $10 billion, Germany spent $9.5 billion and Japan spent $7.4 billion on cloud services. It is forecasted that cloud computing will carry out 94% of all organization’s and company’s workload by 2021 and the global cloud computing market is expected to grow past $623 Billion by end of 2023 (Richter, Felix,11 February 2020, Para.1). Even though AWS has 33% of the cloud market, it can come down quite easily. Therefore, AWS must not stop and capitalize on this ever-growing market by dedicating more investment and manpower to develop and deploy more services and technologies to stay relevant, technologically advanced, and on top. AWS Snowball is an innovation that can help in getting this.

      2. Major Competitors and Their Status in the Industry

Cloud computing is a $100 Billion industry that is always growing. 94% of enterprises are already using cloud computing. 30% of the IT budget is allocated to cloud computing and 50% of these companies spend more than $1.2 Million on cloud computing (HostingTribunal, 28 Feb. 2020, Para. 1). The cloud market is expected to be $266 Billion by the end of 2020 and $623 Billion by the end of 2023(Richter, Felix,11 February 2020, Para.1). AWS is dominating this market for a long time. AWS already has 80% of fortune 500 companies as its customers. But there are many other companies like Microsoft Azure, Google Cloud, IBM Cloud, Salesforce, and Alibaba cloud.

AWS has 33% of the cloud market share by the end of 2019. Microsoft Azure has 18%, Google Cloud has 8%, IBM Cloud has 6%, Alibaba Cloud has 5%, Salesforce has 3% and Oracle cloud has 2% of total market share by end of 2019 (Richter, Felix,11 February 2020, Para.5). This includes platform as a service, infrastructure as a service, and private cloud market. Microsoft Azure is the cloud division of Microsoft. It is amongst the top 3 cloud services. It offers highly technologically advanced computing tools such as artificial intelligence, the internet of things, machine learning, and many more. Azure offers 70 computing services as opposed to AWS’s 175. Google cloud is also one of the top 3 cloud services. It offers edge storage with the help of Kubernetes and also offers low priced infrastructure like G-Suite and GCP. It offers data storage, Business intelligence, machine learning, and application development tools. These are just a few of the many tools offered by Google cloud (Scott, Tamara, 8 July 2019, Para. 1-7). Alibaba Cloud is the cloud division of e-commerce giant out of China which offers application development, analytics, and big data and domain services. IBM cloud services let users develop and deploy applications with the help of Kubernetes or Cloud Foundry in many coding languages. The IBM Cloud is supported by more than 60 data centers around the world. Oracle has a network of databases all over the world and its systems like NetSuite and Oracle ERP runs best on Oracle cloud. It offers both infrastructure and platform as a service (IaaS PaaS) (Scott, Tamara, 8 July 2019, Para. 1-7).

  • Tools Used
  1. SWOT Analysis (Competitors)

Considering all other competitors to AWS, the following is the SWOT analysis of all of them combined:

  1. Strengths: The main weakness and threat of AWS is its lack of private cloud technologies which is the strength of some of its competitors. Competitors can compete with AWS by using their vast capabilities and the number of databases. Competitors are growing faster rate than when AWS grew. Low prices help in more revenue and customers.
  2. Weaknesses: 80% of Fortune 500 companies are using AWS. Convincing them to switch will be a great task. AWS has been the top computing service for a long time, so to take its place competitors must innovate new technologies that can overshadow AWS. Lack of computing services offered by competitors is the major factor more and more companies and businesses are turning towards AWS.
  3. Opportunities: AWS can make mistakes where competitors can capitalize. Competitors can offer low prices compared to AWS to get more customers. Competitors can offer more services compared to AWS. Innovations can fast track competitor’s place at top of the cloud computing industry. All cloud companies can come together and share resources and revenue to beat AWS. It is highly unlikely, but that is an option.
  4. Threats: AWS has more resources, revenue, and investment in cloud services than competitors. AWS has perfected the cloud computing system. They offer more services than any other cloud services, 175. They are a household name in cloud computing. Innovations needed to get AWS’s place is not going to be easy. AWS generally has more computing and manpower than any other cloud computing technology in the market right now.

        b. IT Business Values – 5 Pillars

  1. Dynamic computing: Cloud computing infrastructure is based on security, scalability, reliability, redundancy, and virtualization.
  2. IT service focused approach: Services are IT-centric rather than server-centric, giving customers all the computing power and services needed for execution of their applications and workloads.
  3. Self-service: Self-service model lets customers build, test, deploy, manage, and report their work as needed on their own.
  4. Self-managed platform: By using software automation, companies are deploying services automatically. This also includes scheduling resource capacity, management, support, ensuring resources allocation/reallocation for users.
  5. Pay as per usage model: This way customer only pays for services they use (Lubinsky, Boris, 15 April 2009, Para. 1).

Operating Plans (AWS Snowball and snowmobile)

  1. Value Analysis of the Plan:

    Transferring data from a company to AWS on the internet, which can be dangerous because of size, location, security risks, and network complications. Snowball can help in providing on-premise physical computing and store data (Allbeury, Ted, 2013, Para. 1). Generally, data transfer prices of Amazon differ from region to region. On average they range from $0.02 to $0.2/GB. Compared to that Snowball costs as following: AWS gives the first 10 days free for on-site data transfer to Snowball device. If it goes above that, they charge $30 per day. The service charge is $300. Data Transfer Out Pricing is $0.03/GB. You can get a discount on that by getting a 1-3 year commitment contract then the fees become $35-$42/day (Allbeury, Ted, 2013, Para. 1). Overall Snowball is costlier than regular data transfer over the internet. But Snowball is an exception to those because it provides solutions for data security over the internet. Snowball attracts customers who otherwise would have been gone because of security reasons. Therefore, even though Snowball is not as efficient and cheap as regular internet transfer, it provides the main quality i.e. security to the customers with small or large and sensitive data who can afford Snowball pricing because they value security over prices.
  2. Risk Analysis: 

    As with any new technology, there are many risk factors associated with Snowballs and Snowmobiles. The first main risk as with any physical device is theft. Snowball is a CPU size device that stores data and computing power. Which, in the lack of proper security, can be easily stolen. This risk can be mitigated by 24*7 security guards and physical security measures taken by high-level data centers. Another risk is of Snowmobile which is a 45-foot long semi-truck that carries 1250 Snowballs to and from AWS and customer. The first risk here is of Snowballs inside Snowmobile being damaged in transit. This can be mitigated by suspending devices in the trailer so that they don’t touch the bottom, sides, or tops of the trailer. The second risk is that of recognition of that truck, it can be prevented by painting truck white so it can blend into all other trucks on road. Another risk of Snowball is the price. Some customers can find prices high compared to regular data transfer. Even though security is needed some customers can move towards regular databases. It can be mitigated in some sense that we can offer small business discounts for the customers who cannot pay these prices. Small businesses will need to have less than 500 employees so that their data can be small enough to justify these discounts. By getting enough small businesses we can make money otherwise lost by not offering these discounts. The main risk includes rivals. Competitors like Microsoft, Google, and IBM have launched their version of Snowball. They are called Microsoft Azure data box, Google transfer appliance, and IBM cloud mass data mitigation. This risk is and can be mitigated by offering more services, 175 to be exact, stated in previous sections. Even though competitors’ boxes offer similar integration, they are costlier and offer fewer services.
  3. Process Value Analysis: 

    Process value analysis includes streamlining internal business processes to fulfill customer needs without sacrificing customer satisfaction. It also includes cutting unnecessary steps and costs. Snowball includes the following processes: First, customer needs to create a job in AWS Snowball management console. When your job is created it is put on a waitlist. To streamline this, we will offer free cancellation if the customer finds waitlist too long if they are no longer interested or for any other reasons. The next process is preparing customer’s Snowball as per their needs and specifications and then shipping to customers. To streamline this, we will offer a 2-day free shipping standard by taking make use of Amazon’s giant retail and shipping infrastructure. Also, we will offer free shipping for more data storage by attracting more data usage customers. The next step is to download Snowball clients to manage your flow of data from your on-premise device to Snowball. Next is transferring data and preparing Snowball for return to AWS. When AWS gets that Snowball, they import that data into Amazon S3. We will offer more secure security like 256-bit encryption and tamper-evident enclosures to ensure the safety of the data and device. Encryption keys are stored in the AWS key management system and they are never stored in the device. These measures are taken so that processes become safe and efficient. We will hire more employees to handle the workload acquired by attracting small businesses (Allbeury, Ted, 2013, Para. 7).
  4. IT Governance Plan:

  • Lines of ownership for the business and technical teams: Snowball is a property of Amazon web services which means its property of Amazon. The customer is only renting the Snowball for 10 free days. After that, if the Snowball is not shipped with data and resources inside it to AWS, AWS will charge $30 per day. Loss of Snowball by the customer has fees of $12,500 for Snowball Edge Storage Optimized, $20,000 for Snowball Edge Compute Optimized, and $30,000 for Snowball Edge Compute Optimized with GPU. The maintenance of Snowballs and Snowmobiles is done by Amazon. The customer is not responsible for that. Security for Snowballs and Snowmobiles is provided by Amazon.
  • Service delivery requirements for business and IT: To get the Snowball or Snowmobile, customer needs to create a job in AWS Snowball management console. When your job is created it is put on a waitlist. Then Snowball is prepared as per their needs and specifications and then it is shipped to the customers. Waitlist time depends on the availability of devices, shipping time to customers, and delivery time to Amazon depends on what kind of delivery method customers chooses and what kind of discount Amazon gives for that shipping and delivery. It all depends on the customer’s needs, data size, and Snowball availability.
  • Customization Policy: Customers can customize Snowballs as per their need for data storage and compute power. Customers can have terabytes of data and also customers can have 1250 Snowballs worth data (petabytes). Customization solely depends on customer’s operations, data size, and scalability needs.
  • Site management storage and lifecycle policies: Once customer orders their Snowball, it is put on the waitlist and then shipped to the customer. After transferring data onto Snowballs, it is sent back to Amazon to put that data on AWS infrastructure. Between all this process, Snowballs are stored at AWS first for the preparation, then in transit then less than 90 days at customer and then again at transit than at AWS. It travels all the time, but it is a property of AWS it finally is being stored at Amazon. Snowmobiles travel all the time and follow the same storage methods as above. Snowmobile and Snowballs have a life expectancy of minimum 10-50 years.
  • Education and training plan: AWS will carry out training for new employees who will be hired because of an increase in demand because of small businesses. AWS will provide documentation, training videos, and personal training to new customers. Any new updates in technology will be taught/informed to all the employees and customers. Regular training exercises will be carried out.

   7. Marketing and Manufacturing Plans: 

Amazon provides manufacturing of Snowballs. Marketing will be improved by the following measures given below.

  • Point of purchase marketing which shows product qualities that captivates the buyer. This kind of sale is possible only if the seller can demonstrate the qualities of the product very clearly and efficiently. The seller must convince buyers of the importance of the product and why they need to buy it.
  • Internet marketing refers to the web (ads) and email marketing will be used to advertise product functionalities. Social media can be used in this type of marketing. Amazon already is an e-commerce giant, so selling Snowballs by using the help of those retail methods will prove successful.
  • Sellers can give discounts to small businesses with less than 500 employees. Small businesses will need to have less than 500 employees so that their data can be small enough to justify these discounts. By getting enough small businesses we will make money otherwise lost by not offering these discounts.
  • Free webinars will be offered by AWS representatives to give knowledge and instruction on the importance of Snowballs and how to use them. This way customers can get the information they need from the comfort of their office or home.
  • Tutorials will be provided with instructions on how to use Snowballs.
  • Direct help will be provided to customers with any problem customers might have. Those help representatives will have some kind of power in solving those problems so that they don’t have to refer to supervisors every time. This help service will be offered 24*7, 365 days a year and it will be free of cost.
  • Word of mouth needs to be spread to get new customers. These loyal customers only can be achieved by performing all the services honestly and on time. Once the customer is satisfied with our service, it will be easier to spread the word by giving references. Maintaining this loyalty will be of utmost importance and employees will be taught to do everything they can to keep the standard and customers for a long amount of time.

Financial Analysis (AWS Snowball and snowmobile)

   1. Operating Expense Proposed Budget:

  • Employee salaries: AWS Snowball department of AWS have a minimum of 30 employees at positions of senior business analyst, business analyst, senior developer, architect, senior programmer, programmer, database administrator, web developer, senior and junior LAN-WAN engineer, senior systems engineer, systems engineer, junior systems engineer, supervisor, help desk analyst, technical support analyst, logistics engineer, team leader, team, junior intern, marketing analyst and maintenance people. More manpower can be needed. By average salary of $80,000, minimum employee expenses from top to bottom will be $2.4 Million/year.
  • Security: Snowballs and Snowmobiles will have 24*7 physical security guards along with state-of-the-art virtual security. The salary of those security guards will cost $100,000/year.
  • Internet ads: Internet ads are of paramount importance in the marketing of Snowballs and Snowmobiles. The average ad on the internet (Facebook, Instagram, and other websites) costs $1.72. That is $10,000/month, which is $120,000/year.
  • Snowballs: Snowball maintenance will be provided by AWS, which will cost around $1,000/Snowball. That is $100,000/year for all 100 Snowballs.
  • Electricity cost: Electricity cost for running all devices, Snowmobiles, and all other equipment will cost around $500/month which is $6,000/year.
  • Shipping: Cost of shipping Snowballs to and from customers will be the responsibility of the department. On average, to and from all locations in the United States, will be around $10/trip. Which will be around $50,000/year for all devices and customers served. Here we will take advantage of Amazon’s massive shipping infrastructure.
  • Fuel and maintenance of Snowmobiles: Fuel of Snowmobiles at $3/gallon will be $50,000/year and maintenance costs $500/month for 5 trucks, will be $30,000/year.
  • Total operating expense per year:

Employee salaries

Security

Internet ads

Snowballs maintenance

Electricity costs

Shipping

Fuel costs

Snowmobiles maintenance

Total costs

$2.4 Million

$100,000

$120,000

$100,000

$6000

$50,000

$50,000

$30,000

$2,856,000

   2. Capital Expense Proposed Budget:

AWS Snowball capital expenses are as follows:

  • Snowball manufacturing: Snowball comes in 3 different models Snowball Edge Storage Optimized, Snowball Edge Compute Optimized and Snowball Edge Compute Optimized with GPU. Each cost $12,500$20,000 and $30,000 to manufacture (Allbeury, Ted, 2013, Para. 4). The average cost of Snowball is $20,833. Even if we consider 100 customers with average data and computing needs of 50-80 TB, the cost of manufacturing is $1.4 Million. Because compute power and integration to Amazon infrastructure are provided by AWS’s core cloud team, its cost does not fall under the Snowball department. But it is still included here.
  • Snowmobiles purchase: Snowmobiles are essentially a 45-foot long shipping container that measures 8-foot-wide, 9.6-foot-tall, and weighs approximately 68,000 pounds which are pulled by a semi-truck with enough space for accommodation for a driver and two full-time security guards. We have chosen industry favorite truck which can blend into any other trucks, Freightliner Cascadia 116’ BBC 60” XT which is highly equipped with safety and comfort for all-day driving which costs around $100,000. We will have 5 of those costing $500,000. Snowmobile includes 1250 Snowballs each, so the cost becomes $125 Million. This cost must not be associated with the department because Amazon will own those vehicles and devices.
  • Devices: Electronic devices are the heart and soul of an IT company and department. All the work is done on those devices. Snowballs departments have desktops, laptops, mobile phones, LAN-WAN devices (communication), network devices, and many more. These purchase and maintenance costs are around $150,000.
  • Software costs: Any outside software required (networks, cellular, websites, and many more) for performing daily operations, will amount to $100,000.
  • Total capital expense:

Snowballs

Snowmobiles

Snowballs in Snowmobiles

Devices

Software

Total

$1.4 Million

$500,000

$125 Million

$150,000

$100,000

$127.15 Million

  • The total cost of AWS Snowball department: $130,006,000 i.e. around $130 Million

   3. ROI, Profit, and Loss Statement:

For regular data transfer from devices to Amazon infrastructure, prices of Amazon differ from region to region. On average they range from $0.02 to $0.2/GB. Compared to that Snowball prices as following:

  • Setup fee: $300
  • Shipping: None
  • Extra day charge (After first 10 free days): $30
  • Data transfer into Amazon S3 (After customer ships Snowball/Snowmobile to Amazon): $0.00 i.e. free
  • Data transfer OUT of Amazon S3 prices (Allbeury, Ted, 2013, Para. 4) are divided into 3 categories by 3 types of Snowballs and 2-3-year upfront commitment:

 

3-year commitment upfront

1-year commitment upfront

On-demand job fee

On-demand extra day fee

Snowball Edge Storage Optimized

$35/day ($38,325)

$42/day (15,330)

$500

$50

Snowball Edge Compute Optimized

$55/day ($60,225)

$80/day (29,200)

$1,250

$125

Snowball Edge Compute Optimized with GPU

$72/day ($78,840)

$105/day ($38,325)

$1,650

$165


AWS gives the first 10 days free for on-site data transfer to the Snowball device. If it goes above that, they charge $30/day. The service charge is $300. Data Transfer Out Pricing is $0.03/GB. Appliance Type Lost Device Fees are:

  • Snowball Edge Storage Optimized: $12,500
  • Snowball Edge Compute Optimized: $20,000
  • Snowball Edge Compute Optimized with GPU: $30,000 (Allbeury, Ted, 2013, Para. 4)

As with any new technology, there must be an initial investment to manufacture, market, sell, ship, and maintain that technology. In the case of Snowballs and Snowmobiles, the operating expense to keep department functional for a year is $2,856,000/year and initial capital investment for all devices and equipment is $127.15 Million. The goal is to get enough customers to justify the investment which here are at least 100 customers. By taking the average price of setup fees, extra day charges, 1-3-year upfront commitments, on-demand extra day fees, and device lost fees of Snowball Edge Storage Optimized, Snowball Edge Compute Optimized, and Snowball Edge Compute Optimized with GPU, AWS’ Snowball department will have revenue of $6,000,000/month. Which will be $72,000,000/year (at-least in the initial year), accounting to $130 Million initial investment of year 1 + $2,856,000 of year 2, the return on investment will be 1.84 years and profits will only increase with every day after that.

Conclusion

A small business owner can get advantage of AWS’s vast infrastructure. Using Snowballs and Snowmobiles, a company with large data and computing resources can transfer data more securely. My plan includes expanding the Snowball department so that AWS cloud services can be accessible to many organizations and to many small businesses with less than 500 employees who do not have enough data to justify the usage of AWS services. Snowballs and Snowmobiles can help eliminate that gap with discount offers to such small businesses. This plan includes offering free cancellations, free shipping, and better security. My plan includes offering discount prices to small businesses who are the backbone of the American economy to attract enough such businesses to justify the discounts. My plan includes investing more in the marketing department to spread the word about Snowball’s and Snowmobile’s features such as security, scalability, customizability, and low costs. My plan includes offering documentation, tutorials, and webinars for explaining the working and updates of Snowballs. This plan will offer excellent customer service by offering 24*7, 365 days a year help desk line, and by hiring more employees. All this will cost $2,856,000 in operating costs yearly and there will be an investment of $127.15 Million in capital expenses. But by investing a total of around $132 Million over 2 years, the return on investment will be of 1.84 years which is very impressive. AWS is already the pinnacle of cloud computing. By following my plan, AWS can reach communities, organizations, and businesses that were never possible before and attract more customers to help them transfer, implement and manage their data/business on AWS’s massive infrastructure to grow Amazon’s revenue and profits substantially.

Bibliography 

Allbeury, Ted. “Snowball.” Amazon, Mulholland Books, 2013, aws.amazon.com/snowball/.

“Amazon Web Services Business Model: Business Model Navigator.” Amazon Web Services Business Model | Business Model Navigator, businessmodelnavigator.com/case-firm?id=8.

“Amazon Web Services.” Wikipedia, Wikimedia Foundation, 13 Apr. 2020, en.wikipedia.org/wiki/Amazon_Web_Services.

Auchincloss, Louis. “The Partners.” Amazon, St. Martin's Press, aws.amazon.com/partners/service-delivery/.

Becker, Braden. “The 8 Most Common Leadership Styles How to Find Your Own.” HubSpot Blog, blog.hubspot.com/marketing/leadership-s

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