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11/9/2006
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Amazon's Jeff Bezos Dishes The Dirt On IT 'Muck'

In an interview, Bezos talks about selling IT services by the sip, e-commerce, the advantages of VoIP, and why he's interested in space travel.

InformationWeek: Is there any chance we might see Amazon partner with a company like Yahoo to fill out its online ad platform? Or do you see yourselves developing your own ad platform?

Bezos: For Amazon.com's Web site, we've just launched a Web platform called Clickriver ... in the last couple of weeks. And it basically allows people to put ads on the Amazon Web site using that platform. But we're very open to partnerships that make sense for both parties. We've done a number of partnerships over the years and I suspect that we'll do more.

InformationWeek: Amazon has made a decent-sized bet on open source telephony as a central piece of its internal communications strategy.

Bezos: We use VoIP phones internally, if that's what you mean.

InformationWeek: Exactly. Does it bring Amazon anything other than lower purchase costs?

Bezos: Lower purchase costs, but also lower cost of administration. You can put the phones anywhere you have IP connectvity, so you have one phone cable instead of two sets of cables. It's simpler to administer. People move offices, they change their phone numbers. There are a bunch of advantages in terms of total cost of ownership. It's not a dramatic improvement in the quality of voice service or anything like that. The old phone system, in terms of connecting you with a clear conversation with somebody else, worked extraordinarily well. I don't see it as being a huge customer experience improver, except in terms of the total cost of ownership, which is a big deal.

InformationWeek: In your discussion at the Web 2.0 Summit with Tim O'Reilly, you mentioned that the biggest cost for infrastructure was not power but lack of utilization. Doesn't Amazon have to take on that cost? If you have a bunch of customers, you still have to have more capacity than you're typically using to account for spikes in demand.

Bezos: Totally true. You'll never get to 100% utilization. But what you can do, if you have a mix of different kinds of customers ... what happens is, if you're one kind customer and you have your own dedicated data center for your capacity, then you don't get to offset ... compare a situation where one company does rendering for computer graphics. Render Rocket is an example, actually, that does use our Web services using EC2. Their peak utilization times are going to be completely different from a company that does, say, e-commerce. So by pooling together dozens of different kinds of companies that have different kinds of utilization peaks and troughs, they tend to cancel each other out. And you'll still have peaks and troughs, even for the average pool, but they won't be as steep. And as a result, you'll get better utilization.

InformationWeek: I understand you're also involved in a space startup, Blue Origin. Is there any reason beyond that fact that space exploration is just a great dream to have?

Bezos: I'm just now trying to think about how we could open up Blue Origin as a Web service. It's not immediately clear to me. (Laughs) But if we can figure it out, we will.

InformationWeek: What's in space for you?

Bezos: This is a childhood passion of mine. It's a very talent team of people working on building a vertical takeoff, vertical landing, suborbital vehicle. It's a separate company and they're doing a fantastic job and I'm very proud of them.

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