Amazon launched its Amazon Web Services (AWS) cloud-computing unit in 2006. AWS generated $8.4 billion in sales in the latest quarter, with operating income up 29 percent to $2.1 billion. Research firm Gartner reported that AWS’ $15.5 billion in annual cloud services is about half of total revenue for this sector last year. Amazon’s closest rival, Microsoft and its Azure cloud service, represents about 15 percent of cloud market sales. Amazon chief technology officer Werner Vogels described the company’s path to dominance.

The Wall Street Journal reports that Vogels, who joined Amazon in 2004 as director of systems research and became chief technology officer the next year, revealed that the company’s “monolithic software and database system” was targeted only at selling books. As the company expanded its retailers into other products, Amazon needed to make a major change.

“We basically had one big piece of software and a whole set of databases related to it that were holding us back from moving faster,” said Vogels, who added that, “any changes made to the database needed to go through 10 levels of approvals, because so many things would be impacted by it.”

Vogels also related that to create features such as Amazon Prime, which debuted in 2005, the company “realized we needed to give our teams a bit more independence, and the only way to do that was to break off this big monolith into little pieces.”

Amazon first separated its three largest data sets — customers, goods and orders — “into smaller units, such as login information or security requirements.” That enabled IT teams to “change one area of IT without having to rework the entire system.”

With the new model, he added, “rather than having a few large development teams working on sections of the same application … [they created] much smaller teams to tackle specific products, services or features.” (These teams were dubbed ‘two-pizza teams’ for being small enough to be fed by two pizzas.)

But, even so, the teams “were all spending time managing their load balances or acquiring capacity and releasing it again, and that became much more of a heavier load as the organization grew … [so Amazon] developed a ‘shared services platform’ around IT capacity, storage and security.” This way, “teams were able to focus on creating innovative new services” and indeed “sparked the development of millions of new features every year, up from a few dozen.”

The company then allowed tech startups access to its products catalog, so they could “develop their own innovative ways of selling products online through Amazon.” When many of these companies failed the IT requirements, “Amazon began renting IT infrastructure and applications online [which] was the driver for what later became AWS.”

“If I look back 10 or 15 years ago, I could not have projected where we’d be now,” said Vogels.