"There once was a store in Seattle
Embarking on new business that'll
Refashion the way
You run business today;
Herding computers like cattle."
-- Anders Bylund, 2010
Strange times make for strange bedfellows. Take for example digital media maven Netflix
What, Netflix buys DVDs online now?
Uh, no. According to The New York Times, Netflix has just embarked on a two-year project to "move most of its Web technology -- customer movie queues, search tools and the like" to an Amazon-powered infrastructure. Netflix VP of Engineering Kevin McEntee explains that this unexpected switch allows Netflix to "focus our innovation around finding movies, rather than building larger and larger data centers."
And so Netflix moves into the cloud. It didn't have to be Amazon's cloud, since there are credible alternatives to the Amazon EC2 cloud-computing service from well-respected vendors like Microsoft
Industry observers estimate that Amazon has about 40,000 server systems dedicated to running the EC2 cloud. That's more than Facebook, which is the second-busiest site on the Internet. It's close to the entire server farms found at Rackspace and Akamai Technologies
The kind of virtual machine hosting you get from EC2 has the potential to make the traditional data center an endangered species. You pay Amazon only for the server time actually used rather than hauling out the wallet to cover hardware costs, tech support, and other incidentals. Disaster recovery is built in, as Amazon mirrors your data across a couple of its data centers. Systems management becomes a desk job, because it's up to Amazon to make sure that all the cables and cards are plugged in the right slots.
Cloud computing is not an easy sell in corporate America, though. IT directors are sweating over issues like privacy and security. How can you trust that your data is safe when it's sitting on somebody else's system? But, as McEntee says, "It's in [Amazon's] interest to make us successful in the cloud. That's why we felt comfortable." EC2 is a big deal for Amazon, and CEO Jeff Bezos expects this amusement on the side to eclipse the mainline e-commerce operations one day. I've been saying as much for years, dude.
Is this a big deal?
EC2 contributes a vanishingly small portion of Amazon's $24.5 billion in annual sales today, with estimates ranging from $200 million to $700 million. But the service is enjoying monthly growth of about 10%, says InformationWeek. Read that again: 10% monthly growth. That's more than 100% yearly growth.
Netflix's joining the party adds credibility to Amazon's cloud services, possibly turning up the heat under that simmering pot. Only 0.3% of the top 500,000 websites indexed by Web traffic analytics firm QuantCast run on an EC2 infrastructure, leaving tons of room for expansion. And again, that's just one market. These machines also do scientific number crunching for NASA and run some services for the federal government. 3M
So don't be surprised if Amazon one day starts breaking out hard data for EC2 and its sister services in financial reports, or splits into two companies to simplify the schizophrenic operations before the e-commerce division becomes the side show. Some might say that the latest win is a sign of Amazon gobbling up Netflix, but don't forget that Netflix is also cozying up to Microsoft and others right about now. An Amazon buyout would surprise me, to say the least.
What have we learned today?
Cloud computing is serious business for Amazon. As much as I appreciate VMware
With that in mind, I just snuck over to CAPS to place a thumbs-up vote for Amazon, betting that the company will outperform the market over the next few years. You can follow my size 13 footsteps and cast any vote you like on Amazon. Or share your insight on Amazon and cloud computing in the comments section below on this page.