Why Amazon Web Services (AWS)?
April 16, 2008 – 10:01 pmI am sure we have all wondered why Amazon is in the utility computing business. Kindle, I can understand. AWS, I am not so sure.
After all, Amazon is a retailer. An Internet pioneer but it is still in retail business. Retail business in general are very low margins business. So why then would Amazon make heavy investment into these Amazon Web Services?
The general explanation given by some gurus, Amazon computing power is built to handle the Christmas season load and more. Rest of the year, the systems utilization is really really low. And thus AWS is lets them monetize that infrastructure. That makes sense to an extent. Does it mean, during the heavy infrastructure usage Christmas season, AWS users will see slower response time?
So, again I started with some of their financials to see if they do a better job at detailing this than Google does. I was pleasantly surprised. To be fair to Google, Amazon has been doing this much longer, both the utility computing and publishing financial reports. Here is what I found in their Q42007 report
Highlights (from Q407 info)...• Over 330,000 developers have registered to use Amazon Web Services (AWS), up more than 30,000 from last quarter.• Adoption of Amazon Elastic Compute Cloud (EC2) and Amazon Simple Storage Service (S3)continues to grow. As an indicator of adoption, bandwidth utilized by these services in fourth quarter 2007 was even greater than bandwidth utilized in the same period by all of Amazon.com’s global websites combined.• AWS launched a limited beta of its SimpleDB Service, which allows queries to run on structured data in real time. This service works in conjunction with Amazon EC2 and Amazon S3,collectively providing the ability to store, process and query data sets in the cloud.• AWS launched European storage for Amazon S3, allowing software developers and businesses to store their data physically in Europe. Amazon S3 is a storage service in the cloud offering software developers and businesses low-cost access to the same scalable and reliable storage infrastructure Amazon uses to run its own global network of websites.... |
The other one where they actually talk about developers as customer
Amazon Web Services provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform, which developers can use to enable virtually any type of business. Examples of the services offered by Amazon Web Services are Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3), Amazon SimpleDB, Amazon Simple Queue Service (Amazon SQS), Amazon Flexible Payments Service (AmazonFPS) and Amazon Mechanical Turk. |
Upon further examination, we can see that their technology and content expenses are nearly 25% of thier total operating expenses. That is very high investment. So, monetizing that should be pretty
Shifting gears here, I put down the financial reports and their marketing blurbs and then pick up a ‘how to’ book from O’Reilly, called Programming Amazon Web Services. Browsing through the book, we can see that the techies at Amazon have done a great job at the service oriented architecture for AWS. As the book tries to explain, they built it for AWS as their own platform to develop applications. I am impressed by the loose coupling (which all SOA should be), support for multiple access systems (REST, Query and SOAP) which makes it open for access through different systems. What I do not like, at least so far from my browsing, is that are SlAs are very weak. They talk mostly about giving a user service credits if the service goes down. This would make it tough decision to deploy a mission critical application in an environment where uptime is not guaranteed with some indemnities. This is one thing Amazon will need to reconsider, though I am sure there is a battle between lawyers and techies going on about it right now.
Going through the resources on AWS site, I also discovered that Amazon has another program in beta called Amazon Devpay. This is where the developers can showcase their applications that are developed on top of AWS and they have billing and an account management application for their customers. This a great motivation for the developers to build on these services. It takes a community to promote these type of innovations.
So, to conclude, I think Amazon is selling a real service. Based on feedback from people who have used it directly or indirectly such as customers of Basecamp from 37 Signals, it seems like this model is here to stay.
I also think that Amazon has laid the model for other larger companies to deploy and leverage their internal systems to generate revenue [anyone from IT reading this?]. I am pretty sure that other large sites will open up their services for external usage. I am sure there are companies that would like to integrate with services from travel sites such as Travelocity or Expedia. The is true implementation of the web services vision and I am glad it is finally coming together.