Amazon.com has been an ecommerce giant since the late 90’s. It now sells almost everything you can imagine, and most people would think that’s also where it makes it’s money.
Wrong – mostly. Outside of techies, most people don’t know that Amazon owns one of the biggest “cloud computing platforms,” known as AWS (Amazon Web Services). This is a platform where companies essentially “rent” computing power, storage, and many other digital services. In 2016, AWS contributed $3.1 billion in operating income to Amazon. Retail contributed about $1.1 billion. Surprised?
So, what is AWS? It’s a massive set of cloud services, allowing companies to build and host web-services, databases, rent computing power, storage, and much more. Companies that used to rent physical servers, or co-location space in data centers are moving their infrastructure to cloud based services. An analogy might be moving from digging and maintaining your own well for freshwater, to a municipal water service that provides fresh water at a low cost.
What’s interesting to me is that these services are charging based on usage, rather than a “flat fee” per month. On the surface, this might sound expensive, but in my experience, it’s actually cheaper. Companies only pay for what they use, be it computing power, database transactions, etc. Amazon has also opened up API’s to it’s natural language processing (build your own Alexa!), and much more.
From a technical perspective, this shift means that people in IT should start learning more about cloud architecture and terminology. That’s what I’ve been doing, and starting to advise for my clients.
Category: E-commerce Comments Off on The rise of pay-for-usage services