The Source of the Amazon
Amazon is quietly hedging its economic bets by selling a product that will probably never appear on most peoples' wish lists--data center services. By productizing their spare computing power and storage, they will be able to convert their spare back office cycles to cash. Even if demand turns down in a depressed economy, Amazon may be able to more smoothly ride through that downturn without having to sell off capital assets in a panic when demand temporarily falls off.
Amazon's EC2 (Elastic Compute Cloud) is leading the continuing trend towards complete outsourcing of back office computing.
It will be interesting to see if this business factors in Amazon's valuation.
Posted on February 04, 2008
