Amazon expanded from books into music in 1998. In 2000, Amazon let competitors such as Target and BestBuy sell stuffs along its inventories. Media sales now total in the billions each quarter, and third-party merchandise, more profitable for Amazon than its own wares, makes up nearly a third of everything sold through the site.
And Amazon is now selling storage, computing power and other behind-the-scenes data center services. The new business, more broadly known as the Amazon Web Services could improve chances for a new generation of Web startups by slashing how much they spend up front on costly infrastructure.
Amazon EC2 lets its customers quickly start up a virtual computer in the “cloud” — industry slang for data centers around the world — then use it as a Web server or for crunching data and shut it down just as fast. Some small companies and corporate has find this infrastructure very useful as they won’t need to buy expensive hardwares, worry about these hardwares becoming irrelevant or hiring systems administrator or network adminisrators.
Adam Selipsky, vice president of product management and developer relations for Amazon Web Services, said Amazon wants entrepreneurs to focus on their ideas, not on hardware leases and crashing servers.
Amazon is certainly not the only player. James Staten, an analyst at Forrester Research, said Akamai Technologies Inc., Enki and Terremark each offer at least a portion of the Web services Amazon is selling. IBM Corp. and Sun Microsystems Inc. offer pricier versions aimed at big businesses, while Google Inc. and Microsoft Corp. are thought to be working on services similar to Amazon’s.
Amazon, which gives away the computer code to access its services, bases its fees on how much data is shifted around and stored. For example, the company charges 15 cents per month for every gigabyte of data stored in its Simple Storage Service. Developers pay another 10 cents each time they send a gigabyte into the cloud and 18 cents per terabyte when they pull data back out.
That really makes Amazon Web Service really attractive. Who said you have to pay thousands to make your servers and data center cope with bandwidth and web traffic? Yes, you still may, but you will be earning many times more then what you’re paying Amazon for doing all the hard work.
It’s too soon to tell if Amazon will be able to turn Web Services into a business with revenue to rival its retail lines. The company declined to say what Web Services brings in, saying only that it had signed up 330,000 customers — startups, Fortune 500 companies, students, researchers and others — by late 2007.
Let’s wake up. Amazon is no more a pure online retailer selling books, games and music etc. They are moving and investing heavily in technology, selling data center services, and Amazon Web Services is just one of their new service that can essentially help web business by cutting their startup costs.