Amazon Becoming a Web Services Wonder

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My admiration for Amazon's business chops and knack for innovation (both high- and low-tech) is no secret. As I blogged back in April, Amazon is becoming quite the Web services wonder. And it even sells its distribution smarts, leveraging its network of warehouses to schlep goods to customers' doors for other companies.


ZDNet blogger Larry Dignan struck a similarly admiring tone in his recent post about Amazon. While Amazon's Web services accounted for "just" $111 million in 2007's fourth quarter and tend to get lost in the Wall Street shuffle as analysts focus on Amazon's sexier retail side, Dignan believes that Web services will be "the future of Amazon."


While Amazon's retail side now funds the company's forays into cloud computing, Dignan expects that dynamic to flip-flop over the next decade. Dignan offers some compelling data points, including that Amazon's Elastic Compute Cloud and Simple Storage Service now utilize more bandwidth than all of Amazon.com's global Web sites combined.


In addition, writes Dignan, Amazon "has become more enterprisey" and offers service level agreements, a practice that competitors like Google would do well to emulate. Amazon doesn't just sell its Web service to others; it also employs them for proprietary innovations. As Dignan notes, an experimental feature on Kindle (which has enterprise potential in its own right) is built on Amazon's Mechanical Turk.