During the Q&A period at a talk by Jeff Barr, the Amazon Web Services evangelist, a venture capitalist made an insightful remark. He said how they had given a company $4 million in financing. $1 million of that went to purchase/lease server hardware and storage.
Amazon.com's web services flips the traditional startup/venture capital financing paradigm. How?
#1 You can test out your business model on a small scale without investing heavily in infrastructure. Why build it before they come? Is your business model working? Is it profitable? You can find this out. As a side effect, the businesses built on amazon.com's web services may be more self-sustaining than one that is simply siphoning off from a pool of initial capital funding .
#2 You can scale as needed with EC2 and virtual machines. EC2 lets you go from 10 to 100 to 1000 virtual machines in real-time, all running your virtual machine image. The caveat is: you need to learn how to build the right virtual machines and manage your virtual machines. Jeff made a remark about how erlang and map-reduce (both esoteric languages that deal with managing scalability) will be valuable skills in probably just a year.
#3 Your costs can go down. Why? Moore's law and whatever law/maxim regulates storage. As storage costs go down, Amazon.com can transfer on the savings to you - you can actually pay less per gigabyte of storage in 6 months. Compare that to having storage hardware that steadily depreciates and heads to slow obsolescence.
Amazon.com's web services flips the traditional startup/venture capital financing paradigm. How?
#1 You can test out your business model on a small scale without investing heavily in infrastructure. Why build it before they come? Is your business model working? Is it profitable? You can find this out. As a side effect, the businesses built on amazon.com's web services may be more self-sustaining than one that is simply siphoning off from a pool of initial capital funding .
#2 You can scale as needed with EC2 and virtual machines. EC2 lets you go from 10 to 100 to 1000 virtual machines in real-time, all running your virtual machine image. The caveat is: you need to learn how to build the right virtual machines and manage your virtual machines. Jeff made a remark about how erlang and map-reduce (both esoteric languages that deal with managing scalability) will be valuable skills in probably just a year.
#3 Your costs can go down. Why? Moore's law and whatever law/maxim regulates storage. As storage costs go down, Amazon.com can transfer on the savings to you - you can actually pay less per gigabyte of storage in 6 months. Compare that to having storage hardware that steadily depreciates and heads to slow obsolescence.