Written by Alex Iskold and edited by Richard MacManus.
We have written
before about the innovative Amazon Web Services Platform. This stack was officially
announced
by Amazon CEO Jeff Bezos during the recent Web 2.0 summit and is now considered part
of the core business strategy for Amazon. While analysts, competitors and Wall Street are
pondering what to make of this move from a business sense, in this post we look at who is
utilizing Amazon Web Services – and how. This post is based on personal communication
with those people, along with the set of
success stories available on the
Amazon Web Services site.
The fact is many small, medium and even large businesses (even Microsoft), rushed to
put Amazon Web Services to use. Why did they do it? Because Amazon offers a decade of
experience in running one of the largest internet enterprises – and has wrapped this
expertise into a set of pre-packaged services and APIs.
To remind you, here again is the Amazon Web Services Stack:
The Amazon Web Services stack is impressive in its scale and also well thought
through. Amazon is methodical about this strategy and is aiming to create an offering
which can truly be called an Operating System for the new Web. Many companies have
already recognized the power and ROI of the Amazon platform and are literally betting
their business on it.
Webmail.us – email hosting provider
Webmail.us is probably the most compelling
success story for Amazon Web Services because of its huge ROI. It is an established
business with over 27,000 customers. It had a real and simple business need – improve the
cost and reliability of its backup system. After considering many alternative solutions,
the company decided to utilize Amazon S3, The Simple Queue Service and the Elastic
Compute cloud to address all of its needs.
The company claims to have improved its backup process and cut costs by
75%. The Webmail.us success story on Amazon contains a paragraph that nicely
summarizes the technical and business gains:
“Amazon’s Web Scale Computing model shifts the focus from do-it-yourself to
let-the-experts-do-it. It allows businesses to scale up or down based on requirements and
demand, and provides pay-as-you-go billing models. This combination allows businesses to
turn fixed costs into variable costs, while knowing that their data or services will
always be available.”
SmugMug – online photo provider
SmugMug is another interesting
success story. It is a straightforward one, because it uses Amazon S3 exactly how it
was intended to be used – for storing large media. Today SmugMug hosts over
half a billion photos on Amazon. And here is the real “wow factor” in this story: one week after
writing the first line of code, SmugMug was storing all of its new images in Amazon
S3.
The Amazon S3 API consists of just a few simple method calls. It is equally easy to
implement in Java, PHP, JavaScript, Perl, C#, Python and many other languages. As the
SmugMug success story illustrates, a simple API means a very quick and painless
adoption.
To pepper this with more numbers: SmugMug is now backing up all of its new images to S3,
which amounts to 10 terabytes of data monthly. The SmugMug site has not gone down since
adopting Amazon S3 and it estimates it will save half a million dollars on its disk
storage annually. So, as the company points out, S3 makes it possible for SmugMug to
compete head to head with bigger companies that have deep pockets, without having
to raise massive amounts of cash for hardware. So this is game changing.
Altexa, ElephantDrive and JungleDisk – backup providers
As soon as S3 came out, many companies recognized an opportunity to deliver
business and personal backup solutions. The model is simple – charge a small premium on
the top of the Amazon S3 storage costs.
With that approach it is essentially a user acquisition battle, where the
implementation and marketing become paramount. Altexa targets small businesses, while ElephantDrive and JungleDisk target consumers – but all of them share
the benefit and ease of use of S3. In their success stories, the companies emphasized
incredibly quick (literally a few days) adoption, cost savings and reliability.
Scanbuy – mobile shopping solution provider
The success stories that we have covered so far are mostly using Amazon’s S3 storage
service. Scanbuy however is utilizing the Amazon
eCommerce API to bring unique comparison shopping solutions to mobile phones. Their claim
to fame is allowing the users to lookup prices by simply scanning the barcodes of items
in a store. This is a clever approach that is made possible by a combination of
technologies.
One of the key technologies here is the Amazon eCommerce API, which offers unlimited
and complete access to most Amazon items. Scanbuy uses the API to fetch the latest
pricing information, letting the user decide if they are really getting a good deal in
the store. And as the company explains, they simply could not have done what they are
doing now without the Amazon eCommerce API.
Conclusion
So why are analysts not sure what to make of the Amazon Web Services? In an article in
BusinessWeek entitled Jeff Bezos’ Risky
Bet, their main concern seemed to be: will businesses use this? Well in
this post we’ve shown that for some businesses, the AWS stack provides a set of very
compelling value propositions – both technical and business. And having real business
success stories with ROI and cost savings in the 50-75% range, makes it basically a no
brainer.
We think that the real question is: does this work for Amazon? Is it ready to be a
software and Web Services company? Will Amazon be able to scale this business
indefinitely… and most importantly: are the margins high enough for it to be
worthwhile? We have to believe that Jeff Bezos and the Amazon team did the math – and that
the answer is absolutely yes.
