Retailing paradigm shift?
‘Direct access to Amazon’s robust technology platform,’ offered the blurb. ‘Build on Amazon's suite of web services to enable and enhance your applications,’ it urged. ‘We innovate for you, so that you can innovate for your customers,’ it promised.
By the end of 2007, Amazon Web Services (AWS) was using more bandwidth than all of Amazon.com’s global websites put together.
Market watchers questioned the sanity of the world’s largest on-line retailer setting up a service that would erode its own box-shipping business. The very sane answer appears to be margins.
Although AWS generated only $131 million of Amazon’s $5.7 billion revenue in the last quarter of 2007, the profits from stacking ‘em high and selling ‘em cheap are, well, marginal. Not so the AWS gravy, which is preponderantly juice from a decade’s worth (over $2 billion) of sunk costs.
Amazon, and most commentators, expected AWS to appeal mainly to SMBs. Amazon is still coy about who is using the services, but states that many start-ups are running all their business through AWS, as cloud computing levels the playing field on buying and staffing new hardware.
In our internet security round-up we said that keeping tools of the trade and security up to date was a a growing distraction from serving customers – who rightly demand data confidentiality. Yesterday’s publication of the 2008 Security Breaches Survey confirmed that the cost of security defences to UK businesses had tripled over the last six years.
Cloud computing
Some call web-scale computing HaaS (Hardware as a Service), but the buzz-term ‘Cloud computing’ will stick.
AWS now offers developers access to its open APIs. Paying only for what you use adjusts costs to growth and demand. Fast response time, round the clock availability, and a level of reliability that shallow pockets could previously only dream of complete the package.
Amazon reckons that businesses spend about seventy percent of their time building, maintaining, and worrying about infrastructure. AWS ‘takes care of those issues and does the heavy lifting,’ says Amazon, leaving businesses free ‘to concentrate on what matters most – product innovation, differentiation, and go-to-market strategies’.
Sounds almost too good to be true.
