San Francisco: This year, Netflix Inc. made what looked like a peculiar choice: The DVD-by-mail company decided that over the next two years, it would move most of its Web technology—customer movie queues, search tools and the like—over to the computer servers of one of its chief rivals, Amazon.com Inc.
Amazon, like Netflix, wants to deliver movies to people’s homes over the Internet. But the online retailer, based in Seattle, has lately gained traction with a considerably more ambitious effort: the business of renting other firms the remote use of its technology infrastructure so they can run their computer operations. In the parlance of technophiles, they would operate “in the cloud”.
Cloud providers such as Amazon, Microsoft Corp. and Google Inc. aim to persuade other firms to give up building and managing their own data centres and to use their computer capacity instead.
Led by Amazon, most cloud services have largely been aimed at start-ups, such as the legion of Facebook and iPhone applications developers.
Although most large companies have taken their first cautious steps into the cloud, many are anxious about data failures and slow delivery of data over a network.
To alleviate those concerns, Google held a daylong conference last week at its headquarters in Mountain View, California, selling its cloud computing services—such as email and business software—to executives of large corporations.
Employees of the Amazon Web Services subsidiary are currently on a multi-city tour to persuade even those companies that might compete with Amazon to stop building their own data centres and move their data onto Amazon’s servers instead.
Kevin McEntee, Netflix’s vice-president of engineering, said Netflix switched in order to “focus our innovation around finding movies, rather than building larger and larger data centres”. As for tethering Netflix’s future to a rival, McEntee said, “It’s in their interest to make us successful in the cloud. That’s why we felt comfortable.”
In Amazon’s model, firms pay only for the computing cycles they use. Customers eliminate the upfront cost of hardware and can then buy more time on Amazon’s data centre as needed. Companies have also used Amazon as a backup system.
In another cloud model, advocated by firms such as International Business Machines Corp., tech companies help large businesses develop “private clouds” in their own data centres, so that various departments and employees can rent computing capacity as they need it without making big budget commitments.
Though Amazon characteristically releases few statistics about its Web Services effort, Citibank Inc. estimates that it will generate between $500 million (Rs2,230 crore) and $700 million this year. That’s less than 3% of Amazon’s annual revenue.
Still, Jeffrey P. Bezos, Amazon’s chief executive, has predicted that its cloud computing division will one day generate as much revenue as its retail business does now. For that to happen, Amazon and other cloud providers will have to convince big business.
Almost every big company is cautiously testing the waters these days. 3M, the St Paul, Minnesota, conglomerate, is using Microsoft’s new Azure cloud service to allow thousands of advertisers to tap into a service that mathematically analyses promotional images and evaluates how visually effective they are likely to be. “It took a lot of the risk out of whether to commercialize it or not,” said Jim Graham, a technical manager at 3M.
But most big organizations say they are wary of placing more critical software and business operations on another company’s computers.
“We are no different than anybody else. We are concerned about privacy and security and compliance,” said Dave Powers, a senior systems engineer at Eli Lilly and Co., the pharmaceutical giant based in Indianapolis, which uses Amazon’s cloud services for some research and development efforts. “We are very careful about what we are putting out there today.”
©2010 / THE NEW YORK TIMES