Bezos banks on Amazon's utility services

Chief Amazon Jeff Bezos was first on stage on the second day the Web 2.0 Summit.
Written by Dan Farber, Inactive
Chief Amazon Jeff Bezos was first on stage on the second day the Web 2.0 Summit. Bezos pitched Amazon's compute and storage services, EC2 and S3, in the cloud, which grew out of what it took to run Amazon's shopping business.
"People are exciting because they see a future where able to go more quickly from idea to a successful product," Bezos said. Amazon does all the heavy lifting on the infrastructure side for Web scale computing. "We make muck so you don't have to," Bezos quipped.
Amazon's digital utility charges the equivalent of $70 per month for the equivalent to a 1.7 gigahertz x86 box or $70 per hour for 700 boxes, Bezos said.
Tim O'Reilly quizzed Bezos about why Amazon is providing utility services. "The answer is we been doing this for 11 years. We take the things we are good at internally and figure out how to expose those and charge for them. We are good at it, we know how to do it and it is an attractive business," Bezos said. "We are in this business to serve developers. We are in the mode now of listening and trying to figure out how to make the services better."
O'Reilly asked about Sun's utility computing initiative compared to EC2 and S3. Bezos declined to comment on Sun, but said, "EC2 is designed to simple to use, self service and inexpensive. All of those things are important."

Amazon has other services, such as Alexa and its new fulfillment service, that can be resold by the drink as a variable cost, he said.
Bezos explained that the biggest cost for Amazon is not power, servers or people maintaining data centers, but utilization. "Because we are high volume, low margin, we are focused on things like power, but lack of utilization is the dominant cost for everybody in world who operates a datacenter. He gave out a figure of 17 percent for utilization (not Amazon's), which is like leaving a 747 on the ground 83 percent of the time.
O'Reilly asked Bezos what pieces were missing from Amazon's set of services. "We have several pieces missing that we have been working on for two years and I am not going to tell you what they are," Bezos said.
Editorial standards