I was reading the article on Amazon in BusinessWeek and my response is “Why not?”. Jeff Bezos just started this new venture, Elastic Compute Cloud, that rents out computational time and storage. As with any business, Amazon, has capacity to accomodate occasional peak times, a huge buffer that is left idle most of the time. The investment in infrastructure is already there, sunk cost, so why not try to make some money off it.
It seems that venture capitalists are directing their start-ups to Amazon for their IT. Makes sense. Now more of that invested dollar can go toward the core business competency rather than building and maintaing IT infrastructure.
Wall Street is not that enthused. They want Jeff to focus on improving the lackluster returns of the retail business. I don’t know. If Amazon’s core competency is in the technologies and operations of it’s online business, why not sell the expertise? It’s like what FedEx and UPS does. They deliver stuff really well because they have excellent logistics. So why not run the logistics of other companies for a fee?
Also, Amazon is doing for small businesses and startups what eBay is doing for small retailers. eBay brought small retailers access to the world market without the costs of being a multi-national. Amazon is bringing to small businesses and startups the IT infrastructure of a Fortune 500 without the investment.
Their not making any money on this venture yet. And it seems it may be a while yet. But the economic impact from businesses not internet related is an exciting prospect.