Amazon at Your Service

Thousands of businesses from around the world outsource their e-mail management chores to Inc., a Blacksburg, Va., company that deals with everything from maintaining mail programs to filtering spam and squishing viruses for clients. runs its own operations on a couple of hundred servers at data centers in Virginia and Texas owned by Rackspace Managed Hosting, based in San Antonio, Texas. But when needed to add short-term storage capacity and build more redundancy into its backup of primary data earlier this year, it turned to another vendor: Inc.

Amazon’s new Simple Storage Service, or S3, has lived up to its name, says Bill Boebel,’s cofounder and chief technology officer, even though the numerous small files typical of e-mail create inefficiencies that conventional backup systems don’t handle very well, and is sending S3 more than a terabyte of data each week. “Amazon let us move faster than anything else out there,” says Boebel. Working with a traditional hoster might have meant writing a custom application to accept the e-mail data, but Amazon required only a relatively simple interface to communicate with its new customer. “They provided back-end storage that we could build on top of,” adds Boebel.

To host the development effort required to build the new storage interface, used another recently introduced Amazon service, a pay-per-usage computing environment called the Elastic Compute Cloud, or EC2, and the company continues to use EC2 for computing tasks related to storage backup. Says chief executive Pat Matthews, “We love Rackspace; they are our biggest strategic partner. But Amazon met our needs for this job, and we cut our data backup costs 75 percent overnight.” S3 costs 15 cents per gigabyte of storage per month; Amazon’s posted prices for EC2 start at ten cents per hour.

Quicker, easier and cheaper—that’s the message Amazon wants companies to hear about its new offerings as it challenges the hosting industry’s long-dominant pricing and service models. The e-commerce pioneer is renting out the muscular infrastructure it has developed to power its own business over the last eleven years (sales for the third quarter of 2006: $2.3 billion), in order to provide storage, computing and other services to all comers.

If the strategy pays off, Amazon will have realized a dream cherished by many CIOs: taking its own internal technology to market as a commercial product. The direct financial return to Amazon in the near term is likely to be minimal, as CEO Jeff Bezos told BusinessWeek in November. But there is value in running the company’s data centers and related businesses at levels closer to full capacity, and in positioning Amazon as a leading provider of Internet services to other companies.

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