



Amazon taps rich cloud of computing power


Quentin Hardy

In the cloud ... Andrew Jassy, head of the Amazon Web services division, at the office in Seattle.


Within a few years,'s creative destruction of both traditional book publishing and retail may be footnotes to the company's larger and more secretive gambit: giving anyone on the planet access to an almost unimaginable amount of computing power.

Every day, a start-up called the Climate Corporation performs more than 10,000 simulations of the next two years' weather for more than 1 million locations in the United States. It then combines that with data on root structure and soil porosity to write crop insurance for thousands of farmers.

Another start-up, called Cue, scans up to 500 million emails, Facebook updates and corporate documents to create a service that can outline the biography of a given person you meet, warn you to be home to receive a package or text a lunch guest that you are running late.

Each of these start-ups carries out computing tasks that a decade ago would have been impossible without a major investment in computers. Both of these companies, however, own little besides a few desktop computers. They and thousands of other companies now rent data storage and computer server time from, through its Amazon Web Services division, for what they say is a fraction of the cost of owning and running their own computers.

"I have 10 engineers, but without AWS I guarantee I'd need 60," says Daniel Gross, Cue's 20-year-old co-founder. "It just gets cheaper, and cheaper, and cheaper."

He figures Cue spends something under $US100,000 a month with Amazon, but would spend "probably $US2 million to do it ourselves, without the speed and flexibility".

He admits, "I don't even know what the ballpark number for a server is – for me, it would be like knowing what the price of a sword is".

Cloud computing has been around for years, but it is now powering all kinds of new businesses around the globe, fast and with less capital.

Instagram, a 12-person photo-sharing company that was sold to Facebook for an estimated $US1 billion just 19 months after it opened, skipped the expenses and bother of setting up its own computer servers. EdX, a global online education program from the Massachusetts Institute of Technology and Harvard, had over 120,000 students taking a single class together on AWS. Over 185 United States government agencies run some part of their services on AWS. Millions of people in Africa shop for cars online, using cheap smartphones connected to AWS servers located in California and Ireland.

"We are on a shift that is as momentous and as fundamental as the shift to the electrical grid," says Andrew Jassy, the head of AWS. "It's happening a lot faster than any of us thought."

He started AWS in 2006 with about three dozen employees. Amazon won't say how many people now work at AWS, but the company's website lists over 600 job openings.

Amazon's efforts are just the start of a global competition among computing giants. In June, Google fully launched a service similar to AWS. Microsoft is also in the business with its offering, Windows Azure.

If only for competitive reasons, Amazon doesn't say much about AWS. It, however, is estimated to bring in about $US1 billion to Amazon. Its three giant computer centres in the US, in Virginia, Oregon and California, each consist of multiple buildings with thousands of servers. There are others in Japan, Ireland, Singapore and Brazil. And the pace of its expansion has quickened. It opened four of those regions last year and is believed to be building a similar number now. Jeff Bezos, the chief executive of Amazon, is interested in setting up cloud computing installations for other governments.

Amazon recorded more than $US50 billion in revenue last year. Jassy thinks AWS is probably less than 10 per cent of its eventual size.

The lower cost of computing, along with overnight deployment of machines, drives the business. Germany's Spiegel TV paid AWS to make digital copies of 20,000 programs. It cost less than Spiegel would have paid for the electricity powering its own servers. After a bank in Spain used AWS to shrink a credit risk analysis from 23 hours to 20 minutes, Jassy noted, "they didn't go home early, they did more".

All that data running through Amazon's cloud also has value. People leave bits of data about themselves that others then analyse. At any given time on AWS, there are about 1 million users of a powerful database, called Elastic MapReduce, that is used to make predictions. Some suggest a new movie or video game to play, while others log behaviour for advertising, credit history or suggestions about whom to date. (Companies have to permit their data to be analysed.)

The efficiency of this hyper-aware environment is already remaking jobs for many, and will likely dislocate more.

"You can now test a product against millions of users for just a few thousand dollars, or start a company with just one or two people," says Graham Spencer, a partner at Google Ventures, which invests in data-heavy start-ups that rely on cheap computing at Google and Amazon. "It's a huge change for Silicon Valley."

That vision is in line with the way Bezos sees AWS, say executives who have worked closely with him.

"Jeff thinks on a planetary level," said David Risher, a former Amazon senior executive who now heads a charity called Worldreader, which uses AWS to download books to thousands of computers in Africa. "AWS is an opportunity, as a business. But it is also a philosophy of enabling other people to build big systems. That is how Amazon will make a dent in the universe."

The New York Times


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