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Amazon’s hot new service

Alex Christie

4 February 2008

Amazon looking to prove critics wrong…again

Back in 1998 critics thought it was over the top when Amazon.com expanded from books into music. When the web retailer let competitors start selling things alongside its own inventory in 2000, they said Amazon has lost the plot altogether.

In both cases, Amazon proved them wrong. Media sales now total in the billions each quarter, and third-party merchandise, more profitable for Amazon than its own wares, makes up nearly a third of everything sold through the site.

Now, Amazon is making an even greater stretch – selling storage, computing power and other behind-the-scenes data center services. Amazon expects this new venture to generate vast amounts of revenue but also help the web retailer should they be affected by threats of an economic meltdown. The new venture is called Amazon Web Services and designed to slash startup costs for expensive web infrastructure.

The service works as follows, if a car insurance company enters into web sales it could it move all its applications onto Amazon Web Services. This allows customers quickly start up a virtual computer in the "cloud" – industry slang for data centers around the world – then use it as a web server or for crunching data and shut it down just as fast. This removes the need for a web or network administrator and also prevents hardware from becoming outdated.

Amazon, which gives away a computer code to access its services, bases its fees on how much data is shifted around and stored. Whilst Amazon is not exclusive to this new market it is by far the biggest player. Time will tell if Amazon can match their previous retail success with this new offering.

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