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April 16, 2008

Amazon Web Services reduces cost for startups

Filed under: Cool Ecomm sites — estreet @ 9:15 am
Tags: ,

I got a visitor from Amazon AWS yesterday.

In the past week, I’ve decided to use AWS for my banner maker processing and storage instead of dedicated servers. My driver is efficiency – both in terms of money and computing resources.

Here’s a summary of Amazon Web Services:

Amazon now allows businesses to “rent” computing power, data storage and bandwidth. Small- to mid-sized companies can take advantage of Amazon Web Services (AWS) such as the Simple Storage Service (S3), Elastic Compute Cloud (EC2), Simple Queue Service (SQS), Flexible Payments Service (FPS), and SimpleDB to build web-scale business applications. Amazon offers a new paradigm: use what you need, as you need it, and pay as you go.

This is why I love the web industry. The cost of running a web service is low and going lower. The main expenses of a web business are:

  1. People – but Elance.com helps with outsourcing development – rates are $15-$20 per hour
  2. Servers – Each dedicated server runs $300+ a month
  3. Accounting – $2000 a year for a corporation
  4. Advertising – Email marketing $30-$100 per month – optional affiliate program

AWS reduces #2. SmugMug for example saved $1M in one year using AWS. A photo-hosting service with 10,000 users needs ~10 dedicated servers @ $3,000 per month. When I get the figures for a AWS solution, I’ll post the savings figures.

The beauty of renting computing power and storage is that you don’t have to commit, just pay for what you use. It’s like going to a buffet and only paying for what you eat.

Amazon is doing their part to disrupt the status quo of startups.

Status quo ->

    Raise Venture Cap, spend a lot of money, have meetings, develop a web service, own a fraction of the service.

Now it’s ->

    Develop a great web service. Own your service.

Thank you, Amazon and Jeff Bezos, for creating a better way build a startup!

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