Amazon looks to widen lead in cloud computing

Aaron Ricadela
30 Apr 2010

Other deep-pocketed tech companies are building cloud platforms as well. Google runs a cloud product called App Engine, and has shown a willingness to invest when it wants to branch into areas ancillary to search. VMware  is also marketing its data center software for companies that want to build computing "clouds" themselves. "This is going to be an extremely crowded market," says Scott Crenshaw, a vice-president at Linux vendor Red Hat. "It's going to expand before it contracts."

Amazon has several advantages over its competitors. Its cloud computing engineers haven't had to satisfy requirements of large customers, so they've been free to make decisions that emphasize new technology and low costs, says Marten Mickos, CEO of software company Eucalyptus Systems and a former executive at MySQL and Sun Microsystems.

Trending Amazon's way

Adam Selipsky, a vice-president of product management and developer relations at Amazon, says the company learned how to run data centers inexpensively and at a large scale as a result of building its retail business. Many companies will pare back their data center operations in the next decade or two, turning the computing business into one of higher volumes and lower profit margins—a scenario where Amazon excels, Selipsky says. "We're four years into a trend that's probably decades long," he says. Already, Amazon Web Services consumes more computing power than the company's retail business.

For Amazon, expanding geographically and into the IT departments of larger customers will be key as it tries to make the cloud a plank of its growth. With larger rivals aiming to swipe some of Amazon's momentum in this frontier of business computing, Amazon will need to press every advantage it can.

Ricadela is technology editor for Bloomberg in San Francisco.

Bloomberg Businessweek