Jeff Bezos Talks Up ‘Hidden Amazon’

Best known as an online retailer, Amazon.com has been gradually building up the number of Web services it offers to developers, with the ultimate aim of turning that operation into a profitable business.

Jeff Bezos, founder and chief executive officer of Amazon.com, dubbed the company’s growing move into developer Web services as “the hidden Amazon” during a keynote address at the Emerging Technologies Conference on the Massachusetts Institute of Technology’s Cambridge campus Wednesday.

About 200,000 developers have registered to use the 10 different Web services Amazon.com is providing so far, including three that Bezos highlighted in his talk — Mechanical Turk, Simple Storage Service (S3) and Elastic Compute Cloud (EC2).

Mechanical Turk is a Web service that allows developers to post questions to a large group of people to gain their insight on a particular issue. S3 and EC2 are Web services that let Amazon sell excess storage and excess compute capacity respectively to third-party developers.

“These are all pay-by-drink services,” Bezos said. “You can use and experiment.” The S3 and EC2 Web services are proving particularly popular with developers at companies that can’t afford to invest in huge amounts of hardware and storage that they only require on an occasional basis, to test out the scalability of their software.

With EC2, a developer could pay Amazon.com US$70 for continual access for one month to the computing power of one of the company’s high-level servers or alternatively, pay the same amount of money to have access to 700 servers for a single hour, Bezos said.

“It completely changes what’s possible,” Bezos said. “Everyone who’s started a company wants to go directly from their idea to a successful product.” Instead, the inventor faces a host of obstacles, such as lengthy purchasing decisions on what computer hardware to invest in and how to manage heterogenous environments. Bezos terms those IT obstacles as “muck” and is hoping that Amazon.com’s Web services can help alleviate some of those issues. “We’re working on a Web service to get rid of tax lawyers, but it’s not working yet,” he quipped.

Amazon.com plans to make its Web services operation into “a very profitable business,” Bezos said. The company intends to keep its focus on developers with the hope that third-party companies will then use Amazon.com Web services to create consumer-facing applications, he added.

All of the services are work that Amazon.com has already done internally to run its own vast online operations.

“The last few years, we’ve been exposing those things that we have to do anyway,” Bezos said. “It’s a relatively small step to say we’re eating this dog food, we should share it with others.”

One area Amazon.com has had to figure out is what business model to use in selling the services. “It tickles me that we routinely send people bills for 18 cents,” Bezos said. He added that such a process isn’t cost effective at present, but is more about experimenting with a potential new business model.

-China Martens, IDG News Service (Boston Bureau)

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