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EcommerceBytes-NewsFlash, Number 2970 - January 02, 2013 - ISSN 1539-5065    3 of 3

Everyone Envies Amazon Cloud Computing Business

By Ina Steiner
January 02, 2013

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The largest retailers and the smallest online merchants bemoan the power Amazon wields in retail, but the company also has tech firms racing to keep up. Over the years, Amazon developed expertise building its own retail site, and in 2006, Amazon Web Services (AWS) began offering IT infrastructure services to other businesses in the form of web services - now commonly known as cloud computing.

Some people may have been confused when an outage at Netflix on Christmas Eve was blamed on Amazon, but despite the fact that Netflix competes with Amazon in streaming digital content, Netflix uses AWS to power its site. (Amazon apologized for its outage without naming which customers had been affected.)

Amazon AWS has been particularly compelling for startups, since they don't have to invest in large IT expenditures to get started, and Amazon's infrastructure can handle rapid growth.

Companies from Google to Hewlett Packard have their own cloud ambitions, and in fact, Google hired a key sales executive involved in Amazon AWS to head sales of its own cloud platform. Amazon in turn sued the former VP of global sales Daniel Powers, but as Geekwire reported on Friday, a judge largely rejected Amazon.com's attempt to restrict his work at Google.

Amazon says Google has three specific products that compete with its own AWS products - Google App Engine, Google Cloud Storage, and Google Compute Engine. Amazon was clearly concerned that the executive would use his relationship with and knowledge of AWS customers to benefit Google (Powers admitted he had worked closely with 33 AWS customers), and it feared Powers would recruit Amazon employees to work with him at Google. The judge wrote, "Amazon has failed to articulate how a worldwide ban on cloud computing competition is necessary to protect its business."

Make no mistake, AWS is important to Amazon. Andy Jassy, Senior Vice President of AWS, told the Sunday Telegraph newspaper recently, "At the highest levels of this company, we believe that it's quite possible that AWS ends up being the largest business in Amazon."

The Telegraph pegged Amazon's retail business at $40 billion, and said analysts estimate AWS "notched up" around $1.5 billion of revenues in 2011. If Jassy's prediction seems unlikely, think how retailers felt about Amazon 6 years into its marketplace business compared to today.

Meanwhile, former eBay CEO Meg Whitman who now heads Hewlett Packard is also going after the cloud computing business, the New York Times reported in March.

Mashable believes that's the reason why you'll no longer find HP printers and toner for sale by Amazon.com, though it's unclear why, if that's the case, HP is still selling laptops and computers through Amazon.

Companies such as Google have more to fear from Amazon than just its cloud computing business. Amazon is also building its own advertising service that will likely take ad dollars from manufacturers and retailers.

Turn about is fair play - after all, Google has been pushing into ecommerce and payments.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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