Amazon's Newest Product: Storage

Huh? That's right, the online store with
Rob Hof

Huh? That's right, the online store with "Earth's biggest selection" of everything from books to zithers will announce Tuesday morning that it's adding a new and different kind of service: an unlimited data storage service aimed at software developers who are creating new Web sites and services.

This could help spur a whole bunch of new Web mash-ups and other services. Already, a few groups have been using the service, among them a UC Berkeley team running NASA's Stardust@Home project that involves 60,000 images to 100,000 volunteers worldwide so they can scan them for comet dust, the podcasting transcription service CastingWords for storing MP3 files, and for sharing digital storyboard elements.

All these folks need a lot of storage, but it's not that easy to set up storage services cheaply, easily, and reliably at the same time. Amazon's offering up real estate on the same storage system that it uses for its own collection of Web sites around the world for 15 cents per gigabyte of storage per month and 20 cents per gigabyte of storage transferred. I'm told that's cheaper than a lot of hosting services.

What I find most interesting from a business standpoint is that this looks like the clearest step yet that Amazon has taken beyond the retail business model on which it was created. And it should put to rest the notion, still popular among a few analysts, that Amazon is just a retailer.

Adam Selipsky, Amazon Web Services vice-president of product management and developer relations, characterizes the service as simply an extension of the Web services that for years it has offered to developers--access to its product listings, historical prices, its Alexa Web search data, and the like.

True enough. But even after writing a story years ago about how Amazon really is a technology company more than a retailer, I still think a storage service kicks its business diversification up a notch. Most of the Web services (though not all) seem chiefly aimed at helping spur new applications that ultimately fish back to Amazon, where somebody might buy a book or something else.

The S3 "simple storage service" seems to suggest that ultimately, Amazon could offer a wide range of services to do whatever businesses and consumers want to do online. In this case, says Ronald Schmelzer, an analyst with ZapThink, "They're building a system to sell digital goods."

Not the least, this may be a message to anyone who might doubt that Amazon has the means to be a real player in digital media. After all, Amazon has been talking with music labels and movie studios about providing digital delivery of music and video. It's not that this kind of storage setup is necessarily what studios would use, but the fact that Amazon feels confident enough to offer it even to developers indicates it has some serious capability to handle such a service. And it already has the makings of a consumer digital storage service with its Digital Locker, now used mostly for holding e-books, product user manuals, and a few song and video clips.

So what's Amazon turning into? "They want to be seen as a platform for Web 2.0 applications," says Schmelzer. That still may take awhile. But it's clearer than ever that Amazon intends to keep pace with the big guns on the Web.

For more, check out Mike Arrington's take. He thinks this completely changes the game in online storage.

Update: Colin Falkingham notes that both Mike and I missed something (which in our defense Amazon didn't bring up): S3 supports BitTorrent, the peer-to-peer technology that makes sharing and delivery of big media files much more doable. Very interesting, especially with Amazon soon to dive much deeper into digital media.

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