Sunday, April 13, 2008

The Amazon Story

Amazon Web Services (AWS) amazes me. Not only have they built a fantastic platform but also it seems such an odd direction for a book and DVD company. I have often mused about how Amazon went in this direction by imagining the board meeting when the suggestion came up:

Jeff: We’re doing great. Book sales are through the roof, our recently launched DVD service is taking off and we even have a community market place that is getting traction.
Investor: Yes, the numbers look great. What’s next?
Jeff: Well, I think we should develop a compute cloud and build a set of Web Services around it to allow developers to build applications on our technology.
Investor: Hmmm... I don’t get it. What about selling electronics?
Jeff: No, I like the cloud idea.

Talking with Dave the other day gave me some insight as to how Amazon really stumbled on this interesting direction (though I still like my boardroom conversation). Basically, Amazon has a boatload of compute power available for redundancy and for them to cope with peaks such as Christmas. About 6 years ago the economy was on a downturn, Amazon sales were not doing as well as hoped and their stock started going south. Jeff Bezos, who has a reputation for having some crazy ideas decided to back the Electronic Compute Cloud (EC2) project since Amazon already had the infrastructure and knowhow for building hugely scalable systems and they had a bunch of hardware that was doing nothing.

It was a gutsy move for Amazon since EC2/AWS would not have been a short-term revenue generator and I doubt it is having a huge effect on Amazon’s earnings 5 years later. However, few would argue today that many in the industry are looking into compute clouds and SaaS with great interest. It’s just a matter of time.


Joseph A said...


If you think that AWS is a bit of a departure for Amazon & Jeff Bezos, do you know of his other company Blue Origin? Very exciting stuff comes from the mind of this man.

Ross Mason said...

Hi Josheph, no I didn't know about Blue Origin, very interesting. He seems to be going in a similar direction to Richard Branson.