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Amazon Inadvertently Makes a Case for Rackspace

Last time, wicked thunderstorms took down's (Nasdaq: AMZN  )  East Coast data center. This time, with nary a cloud in the sky, failures in multiple cloud services caused trouble for a variety of Amazon Web Services customers, including location-based social network Foursquare and's (NYSE: CRM  ) Heroku online application development platform.

Outages like this are bound to happen. This is the Internet, after all, a fully distributed system designed not to operate flawlessly but with enough redundancy to withstand all but the most cataclysmic of national disasters.

Performance was never the point. It was only when enough of us began using the Internet that performance became the point, giving birth to the likes of Akamai Technologies (Nasdaq: AKAM  ) and AWS. Yet all networks have limits.

Here, instances of Amazon's Elastic Compute Cloud and Relational Database Service suffered "degraded performance" and "connectivity issues" from the late morning through at least the early evening, according to the AWS Service Health Dashboard.

At some point Amazon will figure out exactly what went wrong. We in the media will then get the results and toss them about like a salad, wondering aloud why the e-tailer didn't do things differently. But that's hardly the point.

The lesson here is that AWS is just as vulnerable as any hosting service, including its main rival: Rackspace Hosting (NYSE: RAX  ) . And you know what? That's fine! In fact, I suspect a plurality of start-ups and more than a few mature Web operators use both AWS and Rackspace as a failsafe for unforeseen conditions.

Actually, that's not taking it far enough. I think the cloud's big winners will be those businesses able to carefully stitch together disparate services for crunching huge volumes of data. That's just the sort of service AWS purports to be, which is why my Foolish colleagues John Reeves and David Meier name Amazon the ninth greatest publicly traded big data company.

How much will big data play a role in the e-tailer's profit picture? To answer this question and more, one of our top equity analysts has issued a new report that explains whether Amazon is a buy now, and why. Click here to get instant access to his research.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Rackspace Hosting and Salesforce. at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of The Fool owns shares of and has created a synthetic short position on Salesforce. Motley Fool newsletter services have recommended buying shares of Salesforce,, and Rackspace Hosting. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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