And You Thought Amazon Just Sold Books

Just like Toyota is now known for selling automobiles instead of the textile looms that got the business started in the 1930s (see this New York Times article for more, registration required), my guess is that in twenty years, the fact that Amazon was originally an online bookseller will be relegated to a historical footnote.

At a conference last week, I saw a presentation by Jeff Barr, "Web Services Evangelist" at Amazon that gave me an idea of what the future is going to look like on the Web.

In order to run a business these days, you'll probably need a Web business.

And if you run a Web business, you need a bunch of servers. You need a Web server to dish up pages, a database server, email server, an application server and what have you. How many do you need? Good question. The safe bet is always to buy slightly more than you think you'll need for peak capacity. Unfortunately, that costs extra. And, keeping all of your standby capacity ready to go at a moment's notice takes extra effort in terms of configuration, backups and patches. Plus, you have to plug all of these extra servers into the power grid, where even if they're just sitting there waiting to be told what to do, they're consuming increasingly valuable wattage.

Of course, these servers also need storage, and again, you'll run up against the capacity question. How many drives do you need for peak capacity? Pick a number and double it, since you'll need a standby backup, and don't forget your tape backups.

Once you've got your servers and your storage, you may face a network problem. What happens if suppliers in Shanghai and buyers in Barcelona need to access your customer database in Connecticut? You'd have to be running a fairly large business to make the investment to figure out how to provide not just global access to a single database, but local access to a distributed database.

Using a pay-as-you-go model, Amazon Web Services offers its "Elastic Compute Cloud" (EC2) that lets you rent virtual servers by the hour; "Simple Storage Service" (S3) for renting disk space by the gigabyte-month; and the "Simple Queue Service" (SQS) to allow these servers and your own machines to communicate with each other. It's still fairly technical to implement, but the pieces are all there for a business-ready Web infrastructure.

You can start as small as you want. Need 50 extra gigabytes to store raw video footage? No problem, just upload it to your S3 space. Once you've turned that video into final form, you can back up your data to CD and then relinquish the S3 space, paying only for the time you used it. At $0.15 per GB/month for storage and $0.20 per GB/month for data transfer, it'll cost you about $27.50 to upload and store 50GB for a month, plus $10 each time you download the whole batch of files. Even if you spend $50 to $60, that's still less expensive than buying, installing and managing a hard disk for something you only need occasionally.

Then, let's say you want to upload your completed video presentation to a streaming media server accessible to potential customers and suppliers around the world. All you'd have to do is upload an "Amazon Machine Image" of a streaming video server to Amazon EC2, and send all of the data to Amazon S3. Amazon will create a virtual server (1.7Ghz x86 processor, 1.75GB of RAM, 160GB of local disk, and 250Mb/s of network bandwidth), and copy server images around the globe as necessary to service requests from around the globe.

It's still early days, and there are some missing pieces. For example, it's not yet feasible to set up Amazon images of your Windows servers, since the Microsoft licensing terms weren't built for this kind of business model. However, it won't be long before Amazon shakes up the Web hosting business, exerts serious pressure on computer hardware manufacturers, and creates new business opportunities for those who can figure out how to use its infrastructure to best advantage.

There's an O'Reilly book called Amazon Hacks that contains recipes for how to use many of these capabilities. Hmm... I wonder where I can buy a copy?

— Ivan Schneider recently set out to start his own business, ivantohelpyou, helping others with theirs. Follow his ongoing adventures here. You can write to him here.