What’s Amazon’s fastest-growing business? Hint: It’s not books
Learn what the Seattle online retail giant is promoting on its worldwide tour.
We all go to Amazon for a whole host of things everyday: Books. Diapers. Selfie sticks. Heck, some of us have even bought cereal from the site. And why not? With a simple (and patented) "One Click" button, a case of Special K can be at your front door in no time at all.
But Amazon's tentacles reach far beyond being the biggest store on the planet. Not as many people are familiar with the other business of Amazon. But that will soon change as the company is visiting 27 international cities this year – from Chicago to Paris to Tel Aviv – to talk up the benefits of this burgeoning field.
What is this non-book, non-diaper related business?
When a website or technology company gets up and running, it needs thousands of servers to process all the information to make its business run smoothly. But those servers can be cost-prohibitive. So Amazon created server farms all across the globe, and companies can simply rent space on them.
This division, known as Amazon Web Services (AWS), has turned the Seattle-based company into one of the world's largest web hosting companies. That blog you have about your cat? It's more than likely that the servers that make it work are hosted by Amazon. Some of the most popular websites are run on these servers: Reddit, Spotify, Pinterest and Netflix, just to name a few. According to Gartner Research, Amazon's web hosting services are 10 times larger than the next 14 competitors combined.
So it's no wonder that it's become a major part of Amazon's business model, growing at a much faster rate than its retail side. "Though Amazon made its name selling consumer goods, its retail operation is covered in red ink," wrote Cade Metz in a recent issue of Wired. "In the cloud, on the other hand, Amazon is both powerful and profitable. In the future, Amazon may be a cloud company with a retail site rather than the other way around."
These AWS events across the world (one starts in Amsterdam today) are drawing lots of attention. At the Tel Aviv event last week, which drew thousands of people, Amazon announced it would be opening a new R&D center in Israel – dedicated to its web services operation. That's great news for many Israeli-based tech companies like Moovit, GetTaxi, Wix and Meerkat that use AWS to help run their businesses.
Jerusalem-based Glide was one of four local companies that made presentations at the event. "Among the different Amazon Web Services utilized by Glide, Amazon Kinesis enables us to get close to real-time information of our users’ behavior and preferences," Glide's Roi Ginat said. "We are then able to successfully nurture our product, while always putting our customers' needs and experiences first."
Brad Stone, a senior writer for Bloomberg Businessweek, wrote about this expanding side of Amazon's business in his book about the company titled "The Everything Store."
"Amazon's inexpensive and easily accessible web services facilitated the creation of thousands of Internet startups, some of which would not have been possible without it, and it provided larger companies with the ability to rent a supercomputer in the cloud, ushering in a new era of innovation," Stone wrote. "It is not hyperbole to say that AWS ... helped lift the entire dot-com industry out of a prolonged dot-com malaise."
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