Amazon\u2019s second quarter earnings left something to be desired. The company\u2019s report detailed declines in stock price, revenue growth rate, and, alarmingly, a slow-down in the growth of Amazon Web Services. Long the tech giant\u2019s reliable cash cow, AWS\u2019 growth has fallen 4% this quarter, from 41% to 37%.\r\n\r\nPerhaps you saw last week's story in Forbes by Peter Cohan entitled "This is Why Investors Should Worry About Amazon's Future." Peter and I had a terrific conversation and, of course, not everything we spoke about makes it into the story. Here are some of my thoughts I shared with Peter, not only about how Amazon's future impacts investors and customers, but what\u2019s caused this recent slip and what can it tell us about the state of the cloud industry?\r\n\r\nThe Rise of \u201cMulti-Cloud\u201d \r\n\r\nLet\u2019s get one thing out of the way early: Amazon is fine. They are doing spectacularly well and are exceedingly well-run. It\u2019s unrealistic to think that anything is \u201cbroken\u201d at Amazon and that their strategy or execution is flawed in any serious way. However, they face inevitable headwinds as the industry matures, most notably from cloud vendors who specialize in pieces of what AWS offers. This \u201cmulti-cloud\u201d approach is stratifying the industry and allowing customers to choose the best services to suit their specific needs.\r\n\r\nThere are several things driving the move to multi-cloud. First, customers are wary of having all their eggs in one basket. Amazon\u2019s pricing and policies promote \u201cvendor lock-in\u201d and customers are discovering how little leverage they have with Amazon. An example is the fees that Amazon charges for taking data out of Amazon storage. It\u2019s free to put data in, but they charge hefty fees to take data out. Hence it can be prohibitively expensive to leave Amazon.\r\n\r\nAmazon would like 100% of your cloud infrastructure\u2014their strength comes from offering everything you could want in one integrated service. It\u2019s like going to Walmart for one-stop shopping with everything you need under one roof. This is great for developers who don\u2019t want to deal with the complexities of multi-cloud, however it also subjects them to Amazon\u2019s oppressive pricing structure and the minimal freedoms of vendor lock-in.\r\n\r\n\r\n\r\nSecond, Amazon is competing with some of their customers, notably in retail and entertainment. Amazon\u2019s utter decimation the brick-and-mortar shopping landscape is well documented, but the company's energization of Amazon Studios and Prime Video have some studios worried. One Hollywood executive that I met at a media trade show told me, \u201cThey are competing with us by making their own movies and TV shows. Why would I want to give them even one nickel?\u201d Amazon is so massive it has its hands in nearly every industry, and businesses are wary of giving their data (and money) to their competition.\r\n\r\nThird, AWS has over 100 cloud services ranging from storage to AI. You can\u2019t be the best at everything, so dozens of specialized cloud companies have sprung up to compete with AWS ranging from Wasabi in cloud storage to Packet in bare metal compute, and Stackpath in content delivery. This allows customers to get the best cloud experience for their needs while avoiding the trappings of vendor lock-in.\r\n\r\nWhen you break down AWS into specific services, they are losing ground to specialized competitors who do a better job at storage, AI, disaster recovery, and many other specific services. With the growing acceptance of multi-cloud strategies (and, ironically, the adoption of Amazon\u2019s APIs as de facto standards), customer may move some, but not all, their cloud services to AWS.\r\n\r\nThe rise of \u201chybrid-cloud\u201d, i.e., keeping some IT facilities in-house while moving others to the cloud. Not everything needs to be in the cloud and some customers have decided to move bits of their IT infrastructure to the cloud, but not all of it.\r\n\r\nIs the overall growth in the industry slowing down?\r\n\r\nThe cloud is still growing at a torrid pace, but the base is so large now that it\u2019s inevitable that the growth rates will slowly decline. While percentage growth may be slowing slightly according to statistics I have seen, that doesn't imply that most of the world's data storage won't eventually move to the cloud. In the early days of electrification, most companies generated their own electricity. Not so today, obviously, but similarly it won\u2019t make sense for most companies to run their own data centers.