Amazon Expands its Infrastructure Ambitions

Amazon's push into web infrastructure and utility computing is gaining traction, even if Wall Street is confused and unimpressed.

Rich Miller

November 6, 2006

2 Min Read
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Is Amazon's push into web infrastructure and utility computing a bold forward-thinking business initiative or a huge cash-intensive blunder? Business Week examines the question in this week's cover story on Amazon, accompanied by an interview with CEO Jeff Bezos. The pioneering online retailer has already rolled out its Simple Storage Service (S3) and Elastic Compute Cloud (EC2) this year. Bezos will lay out his vision for Amazon's infrastructure ambitions at the Web 2.0 conference later this week, according to Business Week. An excerpt on Bezos' view of the opportunity:

"A huge fraction of our effort historically has gone into building the infrastructure that lets a Web-scale business run. We have all the scar tissue to [show people we] know how to do it. We think it's also going to be a very meaningful business for us one day. So our motives for doing it are very straightforward: We think it's good business."

With Microsoft and Google already building huge data center platforms, Amazon has come to see infrastructure as critical to its future. "Amazon's a pretty serious dark horse" in that race, Tim O'Reilly, CEO of tech publisher O'Reilly Media Inc., tells Business Week. "Jeff really understands that if he doesn't become a platform player, he's at the mercy of those who do."

Business Week goes on at some length about how the new startegy is not playing well on Wall Street, which wants Amazon to deliver blockbuster earnings, not visions for new capital expenditures that will eat into profitability. Wall Street's disappointment in Amazon is not a new phenomenon, and has never deterred the company from pursuing investments in new technology and infrastructure.

Amazon has already won many converts among its new customer base, effectively remaking the economics of instantly scalable infrastructure. Isabel Wang provides a compelling example of how Amazon's services can cut costs, citing the virtual world Second Life and its use of S3 to manage downloads of new software.

In his Business Week interview, Bezos notes that "it's a different way of doing back-end infrastructure and building these Web-scale applications. ... There's an evangelism effort that has to occur, because this is a new way of doing things." Amazon's evangelism effort begins this week with the Web 2.0 community.

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