Amazon’s New Store: Utility Computing; Study Report


Amazon’s New Store: Utility Computing

  1. What technology services does Amazon provide? What are the business advantages to Amazon and to subscribers of these services? What are the disadvantages of each? What kinds of businesses are likely to benefit from these services?


Amazon offers cloud computing, also referred to as utility computing. The utility provides such as natural gas, electricity and water, Amazon offers computing capacity to other businesses, which need to pay only what they utilize. Similar to other firms, Amazon utilized only a small part of its whole computing capability at a given time. The company’s infrastructure is well-thought-out by several people and business to be one of the vigorous globally. Users to the Simple Storage Service (S3) may utilize only what they require without necessarily buying their own software and hardware and lowers the total expenses of ownership of large and small-sized businesses. Business advantages of this service indicate that the company can generate more revenue from other business by offering its additional computing capacity to those that need the service. Their system is reliable and scalable for both the company and its subscribers. Furthermore, the Elastic Compute Cloud (EC2) services permit enterprises to use Amazon’s services for computing purposes without incurring overhead costs (Neumann, 2010).

In consideration of the above statements, companies may want to work with reputable names in computing utility industry; however, Amazon is not well known as a technology firm as its core business entails retailing. Nonetheless, its rivals such as HP, Sun Microsystems, and IBM might keep on Amazon’s lead and provide utility computing without engaging service-level benefits. Some enterprises are conscious of using a supplier which does not provide SLAs but pledge the accessibility of services in relation to time. The advancement of Amazon Web Services (AWS) can be hazardous to its Web services path and its own retail line if the company does not place itself to deal with the rise in demand on its infrastructure. In addition, the other advantage is that the clients might experience cost-effectiveness in the service and possesses no recompense because there is no service level contract, but only Amazon’s word will sustain 99.9% accessibility (Murty, 2009). Small and large enterprises could profit from utilizing AWS whereby the service discharges small enterprise from TCO with its own infrastructural system. AWS generates the opportunity for other enterprises to work at Web scale minus making the fault that Amazon has committed and learn from the mistake. Huge enterprises may utilize AWS as an auxiliary unit without raising their hardware and related to TCO (Neumann, 2010).

AWS subscribers comprise Mile Meter, Inc.;; Powerset, an up-and-coming search engine firm; Dropbox, Inc., and SmugMug Inc., All these services concentrate on Amazon’s services to eradicate the need for needless hardware, all whilst decreasing costs. Though Amazon has likewise lured in greater profile customers like Linden Lab, Microsoft as well as The Nasdaq, these firms’ utilizes of AWS are principally restricted to a need for augmented capacity during customer spikes during downloads and upgrades of non-transactional, unsafe data. Therefore, supposing Amazon is capable of overpowering its current consistency restraints, AWS might be taken as a computing supplier, which is appropriate for companies of all sizes (Neumann, 2010).

  1. How do the concepts of capacity planning, scalability and TCO apply to this case? Apply these concepts both to Amazon and to subscribers of its services.

Moreover, entrenched in the feasibility and triumph of AWS and its paybacks to customers is the idea of scalability as well as capacity planning. Consequently, capacity planning might be described as the procedure of forecasting when a hardware system of a computer has become saturated to make sure those sufficient computing resources accessible for work of diverse priorities and that the company has adequate computing capability for its present and future needs. Undervaluing scalability and capacity planning would likely to create shortages for Amazon business and its customers while overvalues will impact the company’s financial assets. Certainly, Amazon should plan its future requirements to be in a good position to offer adequate computing power for both Amazon retail services and AWS, absence of which will lead to the abovementioned rejection by the users. Correlated to capacity planning is the concept of scalability, which is the capacity of a product, computer, or system to enlarge to serve a huge number of subscribers without breaking down. Scalability is related to both AWS and Amazon users. Amazon should be able to offer its clients with services, which are scalable as it asserts to do on its website.  Amazon claims to have the capacity to deal with both unanticipated spikes in client usage and continuous growth of customers (Murty, 2009). Despite Amazon’s assertions, scalability is only viable with effective and appropriate capacity planning. Amazon needs to maintain the total TCO of its present services, all whilst making sure it produces revenue from it. Finally, if Amazon fails to offer consistent scalability, it will likely to lose clients to rival companies having the capacity to provide these services (Garfinkel, 2009).

  1. Search the Internet for companies that supply utility computing. Select 2 or 3 companies and compare them to Amazon. What services do these companies provide? What promises do they make about availability? What is their payment model? Who is their target client? If you were launching a Web startup business, would you choose one of these companies over Amazon for Web services? Why or why not? Would your answer change if you were working for a larger company and had to make a recommendation to the CTO?

In the current business environment, there are several companies, which offer utility computing services. Florida-based DC Wirenet that specializes in offering end-to-end services, IT support, IT outsourcing, internet marketing search engine optimization  (SEO), web design and maintenance, hoisting exchange and database driven website. Similar to Amazon, DC Wirenet guarantees a professional and consistent infrastructure with minimal downtime, also promising quality end-user productivity, minimized risks to mission-crucial information and systems, dynamic levels of their systems control as well as lowered pressures on internal IT resources. Whilst pricing for AWS is very detailed and transparent the payment archetypal for DC Wirenet is not publicized on their systems. This company has a smaller customer base as compared to Amazon, and nonetheless, might choose to modify prices to the customer’s needs. Similarly, DC Wirenet’ target customer is smaller private firms who are in geographic closeness to the firm’s major office. Similarly, DC Wirenet’s target consumer is smaller private firms who are in geographical propinquity to the firm’s chief offices. DC Wirenet is a firm that is perfect for smaller firms seeking to work closely with its cloud computing supplier. Nevertheless, bigger firms might still opt for more well-known firms like Amazon, which might have more assets and may advance a faster pace to offer the most groundbreaking as well as state-of-the-art cloud technology (Antonopoulos & Gillam, 2010).

The other cloud computing utility company is Google’s App that has developed as a frontrunner in the computing industry beside Amazon since its formation in 2008. Both companies advertise the same set of far-reaching services and competitive advantages, like pay-as-you-go price structures and a dependable infrastructure, with an equivalent 99.9 per cent uptime promise. Nevertheless, Google’s main diversity from Amazon is its main Platform-as-a-Service package that concentrates on Google’s present structure.  This allows exceedingly scalable applications to be designed, utilizing extensively accessible data and structures, like Python, Java, and Django.  Whilst the platform-as-a-service idea has permitted Google to be more flexible, Amazon still demonstrates to be more dynamic: Google Inc. restrict developers to its supported apps, languages, and database while Amazon offers developers the choice to use their desired OS and software.  Moreover, Google positions a limit on several of its Web services, which is not similar to the unrestricted capability ceilings provided by Amazon.  Fundamentally, determining between household products like Amazon and  Google is dependent on the extent of flexibility organizations need and the extent to which the profits of these platforms underwrites to the organization’s development and direction (Vliet& Paganelli, 2011).

  1. Think of an idea for a Web-based startup business. Explain how this business could utilize Amazon’s S3 and EC2 services.

It has been established that Amazon’s dynamic and pay-as-you-go offers an opportunity for those people who need to start up a Web-based enterprise since it offers a competitive advantage over rival firms, which need service contracts or by its own storage. Through using Amazon’s EC2 and S3, customers’ pay precisely what they utilize, and it offers inexpensive; nevertheless, the quick method for a business to stock data on a system. Thus, a model of business that could be an e-business network, for example, in which customers could purchase and find employment opportunities, houses for sale, and search cars for sales and mobile phone sale in the expanse expediently. By using S3, the enterprise could keep an XML model of the objects where it is used to host and store objects visited by clients. In relation to EC2, the company has complete control over the machines and selection of the environment. The company might run its individual server in the data centre and EC2 functions as a system administrator. Thus, by using EC2 and S3 would assist the company towards cost-effective business and superfluous set-up of any hardware (Vliet& Paganelli, 2011).



Antonopoulos, N., & Gillam, L. (2010). Cloud computing: Principles, systems and applications. London: Springer.

Garfinkel, S (2009). Abelson, Hal, ed. Architects of the Information Society, Thirty-Five Years of the Laboratory for Computer Science at MIT. MIT Press. ISBN 978-0-262-07196-3.

Hellerstein, J. L., Diao, Y., & Parekh, S. (2004). Feedback Control of Computing Systems.           Hoboken: John Wiley & Sons.

Murty, J. (2009). Programming Amazon Web Services: S3, EC2, SQS, FPS, and SimpleDB.          Sebastopol: O’Reilly Media, Inc.

Neumann, D. (2010). Economic models and algorithms for distributed systems. Basel:      Birkhäuser.

Shroff, G. (2010). Enterprise cloud computing: Technology, architecture, applications.    Cambridge: Cambridge University Press.

Teolis, A. (1998). Computational signal processing with wavelets. Boston [u.a.: Birkhäuser.

Vliet, J. ., & Paganelli, F. (2011). Programming Amazon EC2. Sebastopol, CA: O’Reilly Media.

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