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August 24, 2006

Amazon's new business service

Posted by Kim Peterson at 4:59 PM

The folks at Amazon.com are hard at work these days, and not just trying to figure out how to sell you coconut water.

From Greg Linden and others comes word of Amazon.com's new Elastic Compute Cloud. As I understand it, EC2 is a Web service in limited release that lets developers expand their computing power very quickly for Web-based work. If your business suddenly takes off and you've maxed out your server capacity, for example, you can go online and rent more virtual servers from Amazon.

Other companies have offered this for a while, but Amazon says it's different in that it only charges you for the server capacity you use. You don't have to pay for a predesignated amount.

The company is only accepting a limited number of trial users at this point. It sounds like you are required to use this with Amazon's S3 online storage service, which rents out storage to developers on a per-month basis.

I'm not as avid a follower of the company as other reporters on staff, and might not be the best judge as to what this all means. But it seems like this has very little to do with selling things online and more about Amazon positioning itself as a business-to-business service provider. If this takes off, Amazon would get a healthy, stable stream of monthly revenue that could help the company withstand the tumultuous ups and downs of retail sales. And that, especially given the company's recent profit troubles, would be good news.

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