Today, Jeff Bezos from Amazon announced the launch of Amazon’s Elastic Compute Cloud (EC2) in Business Week. The launch according to Business Week was met with mixed reviews from Wall Street, negative reviews from analysts, but raving reviews from its customers – like Powerset.
I think the problem here is that analysts wouldn’t understand this strategy. It’s somewhat tangential to Amazon’s core business.
What Amazon should really do is give EC2 away for free to certain startups in exchange for equity. This would make more sense as the interests are slightly more aligned and startups can worry less about Amazon kicking them off their system if they ever get big.
Of course Amazon claims to be scalable but I don’t honestly buy it. Could you build a Google within Amazon’s cluster? Probably not. At some point you’ll have to move away from Amazon if you grow to large but this might be a good problem to have.
This might be the Powerset philosophy. They can bootstrap for cheap and solve the problem sometime in the future. This is essentially the art of bootstrapping a company. Figure out what problems you need to solve now and what problems you should solve once you have more capital.
What I really like about this though is that it provides competition for the existing hosting companies. While I like Serverbeach they need to get their act together fast or I might just switch to EC2.
I’ve been telling them for more than a year now that they need to get gigabit ethernet but they are only now coming around. I suspect that it will be more than another six months.
If they don’t offer a compelling alternative startups are going to bootstrap off of EC2 and a huge percentage of their customer base will just vanish.
Truth be told if I were to run Tailrank over on EC2 I could probably save a bunch of cash. The problem is that it would end up costing me more to migrate right now than anything else. At least two weeks worth of work so I’m not in too much of a hurry.