New Services
Amazon requires huge data centers and high-speed Internet connections to run its systems. Through vast economies of scale, Amazon is able to achieve incredibly low prices for data storage and bandwidth. Around 2005, the company decided that it could leverage those low costs into a new business selling Internet-based services. The company offers an online data storage service called S3. For a monthly fee of about 15 cents per gigabyte stored plus 15 cents per gigabyte of data transferred, any person or company can transfer and store data on Amazon servers [Markoff 2006]. Through a similar service (EC2), any company can use the company’s Web servers to deliver digital content to customers. The company essentially serves as a Web host, but instead of paying fixed costs, you pay 10 cents per virtual server per hour plus bandwidth costs. Amazon’s network can handle bursts up to 1 gigabit per se-cond. The system creates virtual servers, running the Linux kernel, and you can run any software you want [Gralla 2006]. By 2011, the company had several locations providing S3 and EC2 Web services. It also offered online relational database services using either MySQL or the Oracle DBMS. Anyone can pay to store data in the DBMS, with charges be-ing levied per hour, per data stored, and per data transferred. The point is that Amazon handles all of the maintenance and other companies avoid fixed costs. Even government agencies are adopting the benefits of storing data in these cloud services—including those run by Amazon. For example, the U.S. Treasury Department moved is public Web sites to the Amazon cloud. [Pratt 2011].
Perhaps the most unusual service is Mturk. The name derives from an 18-century joke where a “mechanical” chess-playing machine surprised European leaders and royalty by beating many expert players. The trick was that a human was hidden under the board and moved the pieces with magnets. Amazon’s trick is to use human power to solve prob-7
lems. Companies post projects on the Mturk site and offer to pay a price for piecemeal work. Any individual can sign up and perform a task and get paid based on the amount of work completed. Amazon takes a 10 percent commission above the fee. For example, the company Casting Words places audio files on the site and pays people 42 cents to transcribe one mi-nute of audio files into text [Markoff 2006].
The Amazon EC2 and S3 services suffered some problems in the summer of 2011. A configuration error during an upgrade in the East Coast facility triggered a cascade that delayed all services in the facility. Internet services including Foursquare and Reddit that used the facility were impacted by the problems for almost a week [Tibken 2011]. Amazon engineers learned a lot from the problems and the same issue is unlikely to occur again [http://aws.amazon.com/message/65648/]. But, the outage points out the risks involved in any centralized system. Ironically, the main problems were caused by algorithms designed to copy data to multiple servers to reduce risks. On the other hand, with multiple facilities, Amazon provides the ability to spread content and risk across multiple locations.
Adam Selipsky, vice president of product management and developer relations at Amazon Web Services observed that “"Amazon is fundamentally a technology company; we’ve spent more than one and a half billion dollars investing in technology and content. We began by retailing books, but it was never in our business plan to stay with that” [Gralla 2006].