Amazon has spent years building a highly advanced -- and very expensive -- computing infrastructure. Recently, financial analysts have knocked the company for its large technology budget.
So it's not surprising that Amazon is selling elements of its infrastructure to other businesses. It sounds like the proverbial win-win. Amazon monetizes its infrastructure, and hopefully gets those pesky analysts off its case. Its customers -- especially SMBs -- gain access to a world-class infrastructure they couldn't possibly afford to build themselves. Overextended IT staffs can spend more time developing new apps and less time worrying about network maintenance.
Most notably, there is Amazon's Simple Storage Service, which is used by companies both small (photo sharing start-up SmugMug) and huge (Microsoft). SmugMug's CEO says his company saved $500,000 in storage costs in the first four months it used the service, which frees up capital that SmugMug can pour into revenue-growing activities.
In a less high-tech vein, Amazon will store goods for outside companies in its 20 distribution centers and have its workers fill e-commerce orders, a service it calls Fulfillment by Amazon. Some Fulfillment customers list items for sale on Amazon, which allows them to offer the famed Amazon shipping discount to their buyers, in theory driving increased sales. Others have their own Web sites or use Amazon rivals like eBay.
A recent New York Times article (republished on News.com) details the experiences of Fulfillment customer Treebeard Books, whose owner eagerly offloaded the time-consuming responsibility of shipping packages. His sales have grown 30 percent in the six months since he began using the service.
Other small merchants report less-than-positive experiences with Fulfillment. Amazon CEO Jeff Bezos says the company is committed to improving Fulfillment, which is barely six months old.