Forecast For Seattle: Increasing Cloud Services

Seattle has become the center of a giant, invisible, global business, with Amazon and Microsoft as its core.

That business is the cloud, now estimated to be worth more than $15 billion to those two companies, which have become world leaders.

The idea of the cloud has been around for decades, but Matt McIlwain, a managing director at Madrona Venture Group says it really got going in Seattle in April 2007.

“That’s when we and Amazon Web Services hosted an event right up here on Capitol Hill,” he said in an interview. “And Andy Jassy, who founded AWS and is still the head of it today, got up and spoke about this magical thing called the cloud.”

The cloud’s beginnings were in the storage of data far from its source. Instead of building and maintaining whole systems, companies could outsource their data to Amazon or Microsoft’s capacious systems, miles away.

A wave of startups have learned to leverage the cloud by building services that companies can access from the cloud – from collaboration tools to systems that calculate sales taxes.

Tim Porter, a managing director at Madrona, says all this computing power is making it easier to run companies – and to start them – by slashing costs.

A startup company can now build its product from a few laptops, accessing services and storage from the cloud.

“Their Amazon Web Services bill for that month might be $4," he said. “It might be a latte.”

This is a reason why Amazon and Microsoft's cloud businesses are growing so quickly.

Overall, says Madrona’s Matt McIlwain, there’s a trillion dollars worth of potential. “So it’s the early, early days of cloud,” he said. “And there’s hundreds of billions of dollars at stake.”