How Amazon took control of the cloud

John Naughton, November 1, 2015, The Guardian.

The pervasive internet, is a  general purpose technology (GPT) that is taken for granted like electricity.  Most people in the industrialized societies never go a day without electric light or using the internet –  and Amazon has a lock-in on it through the far-sighted strategy of its leader, Jeff Bezos.  As the company built a cloud computing infrastructure to support its colossal retailing and logistical operation it designed a dual purpose system: to support the company ‘s core business, and one that could also be rented for a fee to outside users through Amazon Web Services: a global platform operating from 11 regions across the globe.  The core parts are the Elastic Computer Cloud (EC2) and Amazon Simple Storage Service (S3) which together enables anyone with a credit card to rent servers by the minute.  Amazon Web Service has clearly fostered IT innovation – unlike the old days when startups called for large infusions of capital to operate their own servers and added worry about becoming successful and having its website crash – now businesses just rent Amazon Web Service servers and storage, and if more is ever needed, click the link and charge the cost to the credit card.  The costs of starting up an internet-based company have dropped dramatically.  Amazon Web Service is now a critical component of the computing universe with annual revenues in the $8 billion range.  Amazon’s web services are now worth more than its entire retail operation – and growing three times as fast. According to the article, If Amazon were to spin-off Amazon Web Service, its value would be between $70 and $160 billion. 

Question: (1) Do you believe that Amazon has achieved the technological lock-in that Microsoft once had on the desk top computer market: a business could have any kind of computer it wanted – so long as it ran Windows? (2) Do you believe that Amazon has achieved the technological lock-in where the proprietary standards of one company become the de facto standards for the industry? (3) Do you believe Amazon will continue its growth and hold this technological lock-in?



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