Amazons Xmas faux pas shows risks in the cloud

Written by Reuters | Updated: Dec 28 2012, 17:06pm hrs
A Christmas Eve glitch traced to that shuttered Netflix for users from Canada to South America highlights the risks that companies take when they move their datacentre operations to the cloud. While the high-profile failure at least the third this year may cause some Amazon Web Services customers to consider alternatives, it is unlikely to severely hurt a fast-growing business for the cloud-computing pioneer that got into the sector in 2006 and has historically experienced few outages.

The benefits still outweigh the risks, said Global Equities Research analyst Trip Chowdhry. When it comes to the cloud, Amazon has got it right.

The latest service failure comes at a critical time for Amazon, which is betting that AWS can become a significant profit generator even if the economy continues to stagnate. Moreover, it is increasingly targeting larger corporate clients that have traditionally shied away from moving critical applications onto AWS.

AWS, which Amazon started more than six years ago, provides data storage, computing power and other technology services from remote locations that group thousands of servers across areas than can span whole football fields. Their early investment made it a pioneer in what is now known as cloud computing.

Executives said last month at an Amazon conference in Las Vegas they could envision the division, which lists Pinterest, Shazam and Spotify among its fast-growing clients, becoming its biggest business, outpacing even its online retail juggernaut. Evercore analyst Ken Sena expects AWS revenue to jump 45% a year, from about $2 billion this year to $20 billion in 2018.

The service has boomed because it is cheap, relatively easy to use, and can be shut off, scaled back or ramped up quickly depending on companies needs. As the longest-running player in the game, Amazon now boasts the widest array of datacentre products and services, plus a broader stable of clients than rivals like Google, Rackspace and Outages such as the one that took down Netflix and other websites on the eve of one of the biggest US holidays are part and parcel of the nascent business, analysts say.

Amazon most satisfying website to shop remained the best website for shopping online while JC Penney suffered the largest drop in customer satisfaction of any major online retailer this holiday season, according to a survey released on Thursday. Flash sale sites and were among the worst performers in online shopping satisfaction this season, according to ForeSees Holiday E-Retail Satisfaction Index. Amazon has held the highest score in each of the eight years of the index, due in part to the wide variety of merchandise it offers and a site that is easy to use. Amazons score was again 88 out of 100, while and shared the lowest score of 72. had the second-highest ranking, 85, up 4 points from a year earlier.