AMAZON’S NEW STORE: UTILITY COMPUTING

1. What technology services does Amazon provide? What are the business advantages to Amazon and to subscribers of these services? What are the disadvantages of each? What kinds of businesses are likely to benefit from these services?

Amazon provides cloud computing in which also known as on-demand computing or utility computing in which refer to refers to firms off-loading peak demand for computing power to remote, large-scale data processing centers. Amazon offers computing capacity on a per usage basis just like other utility providers of electricity, water and waste treatment.

Business advantages of these services show that Amazon could produce extra income from other businesses by offering its additional capacity to those that want it.  Like other establishments, Amazon used only a small portion of it total computing capacity at any one time.  Besides that, its infrastructure is considered by many to be among the most robust in the world. Subscribers to the Simple Storage Service (S3) can use only what they need without having to purchase their own hardware and software and decreases the total cost of ownership for small and medium-sized businesses. The system is scalable and dependable for both Amazon and their subscribers. In addition, the Elastic Compute Cloud (EC2) service allows businesses to utilize Amazon’s servers for computing tasks without having the overhead costs.

In reflection of above statements, firms might want to go with reputable names in utility computing but Amazon is not known as a technology company as its business is more as a retailer. However, its competitors such as Sun Microsystems, HP, and IBM may keep on Amazon’s lead and offer utility computing without involving service-level agreements.  Some businesses are cautious of using a supplier that does not offer SLAs but promise the availability of services in terms of time.  The development of Amazon Web Services (AWS) could be risky to its Web services route as well as its retail line if the firm does not position itself to handle an increase in demand on its infrastructure. Other than that, another advantage includes customers may experience outages in the service and not have any compensate since there are no service level agreements but only Amazon’s word that will maintain 99.9 percent availability.

Large and small businesses could benefit from using AWS in which the service discharges small business from the TCO of having its own systems.  AWS creates the chance for others to work at Web scale without making the mistakes that Amazon has already made and learned from.  Large businesses can use AWS as an ancillary unit without having to increase their hardware and associated TCO.

2. How do the concepts of capacity planning, scalability and TCO apply to this case? Apply these concepts both to Amazon and to subscribers of its services.

Amazon must require hardware capacity planning and scalability for not just its own needs but for all its subscribers as well. Underestimating capacity and scalability would create shortages for its own business and its subscribers and overestimates would affect Amazon’s financial assets. Too many instances of non-availability could create the impression that Amazon can’t manage the service.  Estimating scalability for such a large and various numbers of users without breaking down is a huge duty.  Amazon must sustain the total TCO of its services, all the while ensuring it can generate revenue from it.  The services’ subscribers grant from not having to concern about these matters and not bearing the burden of TCO issues.

3. Search the Internet for companies that supply utility computing. Select 2 or 3 companies and compare them to Amazon. What services do these companies provide? What promises do they make about availability? What is their payment model? Who is their target client? If you were launching a Web startup business, would you choose one of these companies over Amazon for Web services? Why or why not? Would your answer change if you were working for a larger company and had to make a recommendation to the CTO?

Company that supply utility computing includes Hewlett-Packard (HP). They provide utility computing for PCs, server storage, mail and messaging, print, and centralized data center infrastructure through its distributed grid technology.  It focuses on small, medium and large sized companies for a variety of computing services with their availability at 99.9 percent.

Another company is Sun Microsystems that offers utility computing through grid computing.  It charges $1 per CPU hour.  It offers platforms for its target users in computational mathematics, computer aided engineering, electronic design automation, financial services, life sciences computing tasks. Software developers use Sun’s Network.com service for building, testing, and deploying new applications to their customers. It promises 99.9 percent availability. 

Amazon seems to be an easier service to incorporate into a start-up business because it has been focused towards small and medium sized businesses since its commencement.

4. Think of an idea for a Web-based startup business. Explain how this business could utilize Amazon’s S3 and EC2 services.

Amazon’s flexible and pay-as-you-go model gives an opportunity for those who want to startup a Web-based business because it gives a competitive advantage over companies that require service contracts or purchase its own storage. By using Amazon’s S3 and EC2 services, user pays exactly what they use and it provides inexpensive yet fast method for businesses to store data on a system.

An example of business could be an e-market network e.g. Mudah.my in which users could buy and find jobs, search cars for sale, houses for sale, mobile phones for sale, computers for sale and properties for sale in the region conveniently. By using S3, the business could store XML representation of the objects in which it is used to store and host the objects visited by the users. With EC2, the business has full control over the machines and choice of the environment. The business may run its own server in data center and EC2 acts as a system administrator. Therefore, by using S3 and EC2 would help a business towards cost savings and unnecessary to set up any hardware.