Amazon for Rent

If software-as-a-service (SaaS) is the new "it" technology, then 13-year-old Amazon.com (Nasdaq: AMZN  ) may be the new "it" tech stock.

On Friday, the e-tailer announced that it had begun testing a Web service called SimpleDB that allows any customer, anywhere, to rent database processing power rather than purchase software from Oracle (Nasdaq: ORCL  ) , IBM (NYSE: IBM  ) , or Sybase (NYSE: SY  ) .

Talk about Rule Breaking.

But it's actually more than that. If enacted as planned, Simple DB would join existing Web services dubbed "Elastic Computing Cloud" and "Simple Storage Service," which, together, provide facilities for processing transactions and storing data. Mix in a database, and you've got everything a fledgling e-commerce operation could need.

You know what that means. Amazon -- like Salesforce.com (NYSE: CRM  ) , SuccessFactors (Nasdaq: SFSF  ) , RightNow Technologies (Nasdaq: RNOW  ) , and soon-to-be-public NetSuite -- is expanding its SaaS offering. Only instead of renting out software for customer service or other business functions, Amazon is renting out infrastructure -- e-office space in an already vast and still growing digital world.

How much money will come of this? That's a tough question. But I wonder whether it's the wrong one to ask. We all know that Amazon is an e-tailer first. We also know it has logistics and revenue-sharing partnerships with other e-tailers. From the most recent 10-Q: "We expanded our fulfillment capacity during the nine months ended September 30, 2007, and throughout 2006 through gains in efficiencies as well as increases in leased warehouse space. This expansion is designed to accommodate greater selection and in-stock inventory levels and meet anticipated shipment volumes from sales of our own products as well as sales by third parties for which we provide the fulfillment." [Emphasis added.]

Shouldn't more e-tailers result in more revenue and, thereby, more profits? Seems so to me. And, apparently, to Amazon.

Welcome to the SaaS party.

A river runs through today's related Foolishness:

As Foolanthropy enters its second decade, join us in working to bring financial education to the world's children. Learn more about Foolanthropy's new direction.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 556160, ~/Articles/ArticleHandler.aspx, 7/22/2014 9:59:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement