Sep. 19, 2008

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Late yesterday, Amazon announced that it is branching out into B2B (business-to-business) services, while providing new technology platforms that can attract developers to the company stable. The new B2B service ties into its existing S3 storage platform and Amazon Web Services suite of applications. Customers will be charged on a PFWYU (pay-for-what-you-use) basis.

Amazon Chief Technology Officer Werner Vogels said the new service "will give eCommerce developers and businesses the ability to serve data to their customers worldwide, using low-latency and high data transfer rates."

Werner added "using a global network of edge locations this new service can deliver popular data stored in Amazon S3 to customers around the globe through local access."

Amazon's new service is expected to be officially unveiled by the end of 2008. It is now being tested by private beta customers.

Amazon won't initially provide any competition for the top names in the content delivery space, Akamai and Limelight, according to Dan Rayburn, principal analyst for Frost and Sullivan. "Instead, it will offer HTTP delivery only," Rayburn said. "It's not going to support streaming live broadcasting, not going to have transcoding, it won't be able to do proxy streaming. It will be very limited in terms of functionality."

The new service will still be able to target small-to-medium sized businesses, along with a few large companies, that have basic distribution needs. "The margins are very small on content delivery networks. The way they'll do it is based on scale and volume, and who better to be able to scale and offer very cheap rock-solid service than Amazon? That's what they do already with Amazon Web Services."

However, the regional service providers who operate on a second tier under Akamai and Limelight should be worried about the new Amazon offering. "They're going to be eaten alive because they're not going to be able to compete at the same price point. They'll have to sell customers on professional services, customer service."

Rayburn, who started one of the first streaming media companies in 1996 and writes several blogs about the content delivery network business, released a Frost and Sullivan report in August that projected global video revenues of US $400 million for this year alone.

That number is projected to grow to more than $1.4 billion worldwide by 2012, so Rayburn believes Amazon is positioning itself in the right business segment.

However, Amazon's new storage service suffered technical issues during the summer. "We've seen outages on the S3 service," Rayburn said. "If you're going to do this, it's even more important to have no downtime. The last time you heard about Akamai having a network outage was over three years ago."

Vogels' testimonial promises robust worldwide service in an easily-delivered manner. "You store the data you want to distribute in an Amazon S3 bucket and you use this API (application programming interface) call to register this bucket with the content distribution service," Vogels writes.

He added "the registration will provide you with a new domain name that you can use in url's to access the data through this service with HTTP. When your customer accesses your content through your new url the data it refers to will be delivered through a network of Linux servers."

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Source: Amazon.com.

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