Amazon Web Services (AWS) has long maintained its dominance in the cloud computing market, serving as the backbone for many enterprises’ digital transformation efforts for more than a decade. However, recent shifts in strategy suggest that AWS may be faltering in its ability to pioneer meaningful innovations in enterprise technology.
Case in point: AWS’s recent announcement regarding agentic AI, which feels more like a press release chasing relevance than a proactive attempt to lead the industry into the next era of technology. The company is not announcing a specific product or service but is forming a group that will focus on agentic AI. This is pretty weak tea.
Delayed innovation
As reported by Reuters, the formation of a dedicated group within AWS help customers “automate more of their lives” using agentic AI could have been an opportunity for Amazon to highlight technological breakthroughs or specific innovations that set it apart from its competitors. The pitch that agentic AI will be “the next multi-billion-dollar business for AWS,” per an email from AWS CEO Matt Garman, seems more like a strategy to buy Amazon time.
In the highly competitive world of cloud computing, “fast follower” strategies don’t cut it anymore. Amazon built its early success on bold innovation, popularizing cloud services with EC2 and S3, building AWS into a juggernaut that essentially invented the infrastructure-as-a-service (IaaS) market. However, recent patterns suggest that AWS is no longer proactively innovating. The company appears increasingly reactive to what others in the market are doing.
I would advise AWS to make a strong case for generative AI and now agentic AI as clear trends for enterprise technology. Right now it looks like they are waiting to see if these technologies will be genuinely worthwhile to invest in. As somebody who has been a technology CTO about a half-dozen times, that’s a recipe for failure and death by a thousand cuts. It is better to innovate and fail than not to innovate at all.
Agentic AI and beyond
The AWS announcement comes after key competitors such as OpenAI, Microsoft, Salesforce, and even Google began carving out market opportunities for AI tools beyond conversational systems. AWS appears late to the party, offering little more than a promise of agentic AI tools without many specific enterprise-ready capabilities to back it up. Yes, there were demos of Alexa+ autonomously booking Ubers and navigating websites, but these mostly appeal to consumers and lack the sophistication that enterprises genuinely need. It feels like a big idea with very little underneath it.
Enterprises will no longer settle for vaporware. They expect actionable innovations—tools and systems that can immediately be deployed and provide value. AWS’s inability to deliver on these expectations, coupled with the glacial pace at which new enterprise-ready solutions are rolled out, is prompting enterprises to reconsider whether AWS is still the partner they need for innovation-driven growth.
The slowdown in cloud innovation comes at a critical moment for AWS and other public cloud providers. Enterprises are no longer simply weighing AWS versus Microsoft Azure or Google Cloud Platform; they are rethinking their reliance on public cloud providers altogether. Public cloud was once heralded as the inevitable path forward for enterprise IT, but that assumption is now being challenged as organizations seek alternatives.
A growing segment of enterprises is pivoting toward a more hybrid or diversified technology strategy. They’re turning to private clouds for tailored workloads that don’t require the scale or shared infrastructure of public cloud providers. They’re also investing in colocation (colo) providers, which offer physical data center infrastructure that blends the best of both worlds—control over hardware without the heavy lifting of managing physical infrastructure. Managed service providers (MSPs) are also seeing a resurgence as businesses look for providers that can offer niche expertise, customized solutions, and cost predictability, things that public cloud cost models often struggle to deliver.
Even the traditional hardware market, once thought to be on life support, is seeing renewed interest. Dell and HPE are doubling down on on-premises and edge computing solutions. Enterprises increasingly see value in using their own hardware as part of a larger hybrid strategy or as a safeguard against public cloud outages and pricing unpredictability.
Although AWS has long touted its role as the preeminent leader in cloud innovation, there is a growing perception that the company is resting on its laurels. This creates particularly sharp skepticism among CIOs, CTOs, and other enterprise leaders. Perhaps some are even thinking about canceling their trip to AWS re:Invent this year.
The way forward
For AWS to regain its reputation as an innovator, it must change how it approaches market leadership. Instead of relying on “innovation by press release,” it needs to deliver concrete, enterprise-ready systems faster and with more strategic foresight. It must recognize that its market power is only as strong as the confidence enterprises place in it to lead, not follow.
AWS also needs to address the trust deficit among enterprises by making its innovation road map more explicit and dedicating more resources toward developing solutions that solve real-world problems. Enterprise customers are no longer looking for flashy presentations at re:Invent; they want answers to today’s complex business challenges.
Tough love? Perhaps. AWS is a collection of many smart people, many of whom I count among my longtime friends. I think the leaders at AWS have the means to pivot, but they will need to crave risk again to do it successfully.