Amazon Web Services

There's an open secret about Amazon Web Services (AWS). Everyone's using it, but not everyone admits it. You can see an official list on Amazon's website, but lots and lots of other companies, especially startups, are using the services.

What is it? A set of small, standalone services which can replace the need for a datacenter. Need some extra CPU cycles? EC2 is your answer. Need more disk space? S3 charges you $.10 to upload a gigabyte, and $.10 per month of storage. Amazon wins because people don't all need 100% CPU all the time, so one box can be shared among many different companies. Startups win because they can have datacenter quality uptime and easy scalability without actually renting a datacenter. That lowers their expenses, and makes them more likely to succeed.

Of course, most of these startups were doomed to failure since before the business plan was written, but for the few that succeed, Amazon is a core part of their infrastructure, and a company doesn't want to stop innovating during growth just to migrate their fully functioning infrastructure, and if a company isn't growing, it doesn't have the money to migrate. So essentially Amazon locks them into AWS.

Most people think Amazon is a store. It is, but there's a lot going on underneath the hood. The stock price, in my opinion, is far too low given what's coming, but I guess most analysts don't really see that yet, since most of the companies using AWS are small startups and don't drive a lot of revenue to Amazon's bottom line.

Of course, Dare Obasanjo writes a conflicted post on AWS. On one hand, he likes the idea of not having to re-invent hosting every time a new startup comes alive, but he expresses concerns about the SLA of AWS which, apparently, is not posted anywhere (and Smugmug has reported some problems, albeit small).