Monday, February 22, 2016

Netflix Shifts All IT to Amazon’s Public Cloud

“Netflix Shifts All IT to Amazon’s Public Cloud” is an article from the Wall Street Journal by Angus Loten. Netflix, a global provider of streaming movies and television series, had formerly used an on premise data center to run all aspects of the company’s information technology. However, as of January 2016, the company has shifted all of its information technology to Amazon Web Services, Incorporated’s public cloud platform. The move from the on premise data center to the cloud included the company’s customer-facing video-streaming services, its billing infrastructure, its customer and employee data management, business logic distributed databases, big data processing and analytics, recommendations and transcoding apps, and hundreds of more IT functions.
As of February 2016, Netflix has completely shut down their on premise data center. Netflix now has eight times more video-streaming members than it did in 2008, when it first decided to switch its IT to the cloud. It is also continuing to rapidly change and grow. The cloud is making it easier to operate the company’s significant amount of data. “Supporting such rapid growth would have been extremely difficult out of our own data centers; we simply could not have racked the servers fast enough,[1]” Izrailevsky, the vide president of cloud and platform engineering, said in another article.
 By transitioning from the on premise data center to the cloud, Netflix not only saved money on their information technology and data, but they also increased the public-clouds market IT spending. Because of their transition to the cloud, Netflix’s operating costs decreased. This is because the cloud makes it easier and less costly to grow or shrink the capacity of IT. Also, the public-cloud market is expected to increase by $70 billion dollars by 2019.
Netflix is building a path for other large companies to convert to the cloud. With this migration to Amazon’s public cloud, it has become one of the largest companies to operate entirely in the public cloud. When other companies see the improvement of Netflix’s information technology, they will shortly follow in its footsteps. This will greatly increase the public-clouds market spending.
One thing that Netflix did wrong in this transition from their on premise data center to the cloud was that they used the cloud-native strategy, which means they rebuilt most of their technology in the cloud. In order to transition quicker, they could have used the “forklift” strategy, which means to simply drop existing applications into off-premise servers. Another thing that Netflix may have overlooked is that since Amazon Prime is one of their biggest competitors, Amazon Prime probably has been using the Amazon cloud for a long time. If Netflix makes any mistakes regarding the cloud, Amazon Prime could easily pick up on those mistakes and take advantage of them. Lastly, many companies are taking a hybrid approach to controlling information technology. Since these companies are not completely replacing their existing systems, they will save money for other uses.



  1. Netflix seems to be making a big leap forward in the video streaming business. At this point in time, the premise data has become a little bit dated, therefore their move to the cloud will absolutely help their company. Netflix has expanded immensely to the point that their previous servers could physically not hold the amount of traffic that was coming through to them. Their move to the cloud is able to operate more efficiently using fewer resources. Also this helps their income because the cloud is so much cheaper to operate than their preexisting centers. This being the case, Netflix can focus their funds on other aspects of the business, creating a more successful company. Although they have made such large strides, it is evident that they did not make the move as efficiently as they could have. Additionally, it is a clear disadvantage to them that Amazon Prime has so much more experience with this technology than they do. Netflix ultimately made the right decision to switch to a cloud approach, which is clear in the amount of customers they have brought in since the switch.

  2. Hi Kristen,
    I love the article you chose to write about! you made very valid points regarding it. Netflix deciding to move all of its IT to the Amazon cloud will be beneficial to both the company and its customers. Over the past couple of years Netflix has grown drastically. It is important that Netflix decided to do something like this in order to continue to grow at the rate it is. This move will save Netflix money on the information technology and data. This will also allow the company to increase the public- cloud market It spending. Since the move, Netflix has decreased its operating expenses because the cloud has made it easier and cheaper to increase or decrease its IT capacity. Kristen mentioned how Netflix is the largest company to use a public cloud and therefore push other major companies to do the same. Overall I really enjoyed what Kristen had to say about the article and found it very interesting

  3. Hi Kristin,
    I find your article to be very interesting. Netflix, as we all know, maintains an incredible high marketshare when it comes to video streaming. It doesn't surprise me at all when I read about Netflix closing all their premise data centers. Cloud storage, for information, streaming, and many other forms is clearly the way of the future. If anything, Netflix is once step ahead of the game and we could potentially see multiple other streaming sites do the same thing. What does surprise me is the route Netflix chose considering that Amazon Prime is one of Netflix's biggest competitors. At the same time, this is an extremely smart move by Netflix. They are incurring less costs, and putting the responsibility of their data in Amazons hands. In the near future, as Netflix grows, I would look out for them creating their own cloud service.


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