[tsc] [Fwd: [gfsg] BusinessWeek Front Page Article on Amazon S3 and EC2]

Sat Nov 11 04:43:24 CST 2006

Chris et al,

On 10 Nov 2006, at 19:24, Chris Kantarjiev wrote:

> After some thought, here's what I think bugs me about it: we're  
> writing a strategy document, but it's turning into a list of  
> tactics. For example, we seem to be codifying OGSA as the one true  
> way to build grids, and not making any provisions for embracing  
> alternate architectures.
>
> OGSA is finally showing results, and they have a roadmap. If we're  
> just codifying OGSA, why are we bothering to write another roadmap  
> document?

I agree with Steven here. In fact I was sitting down to write up my  
action to include (the current glaring omission) of an explicit  
reference to OGSA. Oddly enough there are explicit references to the  
(EGA) Reference Model. :-)

> So let me ask a different question, that might point in the  
> direction I intended: if Amazon came to OGF tomorrow and offered S3/ 
> EC2 as a spec and open source implementation, how would we react,  
> other than with utter surprise?

I think they would suffer whiplash from the welcoming handshake. Of  
course they be expected to go through a WG group to ratify (and  
probably improve) the interfaces. An Open Source reference  
implementation is always a good idea, but another implementation  
would be needed as well.

> I think that our documented *strategy* should be broad enough to  
> cover this case - and I don't think it is today.
>
> And that bugs me.

I agree that it MUST be broad enough. If not we need to work on it.  
However, even within the narrow scope of OGSA, we have been accused  
of "boiling the ocean", so a little tight focus at present is neither  
surprising nor a necessarily bad thing.

>
> Best,
> chris
>
> -----Original Message-----
> From David Snelling <David.Snelling at uk.fujitsu.com>
> Sent Fri 11/10/2006 1:38 AM
> To Chris Kantarjiev <chris.kantarjiev at oracle.com>
> Cc TSC <tsc at ogf.org>
> Subject Re: [tsc] [Fwd: [gfsg] BusinessWeek Front Page Article on  
> Amazon S3 and EC2]
>
> Chris,
>
> i think e should remain aware of these offerings, but I don't think
> they need to appear in our technical standards roadmap, unless they
> want to bring their interfaces to the OGF for standardization, which
> might be particularly cool from S3.
>
> However, these should be referenced in the landscape white paper.
>
> On 8 Nov 2006, at 20:31, Chris Kantarjiev wrote:
>
>> So ... how does our Technical Roadmap encompass S3/EC2? Should it?
>>
>> From: "Linesch, Mark" <mark.linesch at hp.com>
>> Date: 8 November 2006 20:12:22 GMT
>> To: <gfsg at ogf.org>, <ogf-adcom at ogf.org>, <ogf-board at ogf.org>
>> Subject: [gfsg] BusinessWeek Front Page Article on Amazon S3 and EC2
>>
>>
>> f.y.i. on Amazon's strategy with S3 and EC2. I think it would be
>> very interesting to open up a dialogue with Amazon …
>> Jeff Bezos' Risky Bet
>> Amazon's CEO wants to run your business with the technology behind
>> his Web site. But Wall street wants him to mind the store
>>
>> Yes, Amazon founder and Chief Executive Jeffrey P. Bezos, the
>> onetime Internet poster boy who quickly became a post-dot-com
>> piñata, is back with yet another new idea. Many people continue to
>> wonder if the world's largest online store will ever fulfill its
>> original promise to revolutionize retailing. But now Bezos is
>> plotting another new direction for his 12-year-old company, which
>> he will lay out on Nov. 8 at San Francisco's Web 2.0 Conference,
>> the annual gathering of the digerati crème. Judging from an advance
>> look he gave BusinessWeek on one recent gray day at Amazon's
>> Seattle headquarters, it's so far from Amazon's retail core that
>> you may well wonder if he has finally slipped off the deep end.
>> Bezos wants Amazon to run your business, at least the messy
>> technical and logistical parts of it, using those same technologies
>> and operations that power his $10 billion online store. In the
>> process, Bezos aims to transform Amazon into a kind of 21st century
>> digital utility. It's as if Wal-Mart Stores Inc. (WMT ) had decided
>> to turn itself inside out, offering its industry-leading supply
>> chain and logistics systems to any and all outsiders, even rival
>> retailers. Except Amazon is starting to rent out just about
>> everything it uses to run its own business, from rack space in its
>> 10 million square feet of warehouses worldwide to spare computing
>> capacity on its thousands of servers, data storage on its disk
>> drives, and even some of the millions of lines of software code it
>> has written to coordinate all that.
>>
>> Another big idea from Jeff Bezos? Go ahead and groan. It's fine
>> with him. Even after all these years spent battling back claims
>> that his company would be "Amazon.toast," he's still bounding up
>> and down stairs two at a time to exhort his band of nerds on to the
>> Next Big Thing. And now, more than ever, he's determined to keep
>> going for the big score, even if people think he's crazy. In fact,
>> Bezos, 42, sounds downright eager to confound a new generation of
>> skeptics. "We're very comfortable being misunderstood," he says,
>> letting loose one of his famously thunderous laughs. "We've had
>> lots of practice."
>>
>> But if techies are wowed by Bezos' grand plan, it's not likely to
>> win many converts on Wall Street. To many observers, it conjures up
>> the ghost of Amazon past. During the dot-com boom, Bezos spent
>> hundreds of millions of dollars to build distribution centers and
>> computer systems in the promise that they eventually would pay off
>> with outsize returns. That helped set the stage for the world's
>> biggest Web retail operation, with expected sales of $10.5 billion
>> this year.
>>
>> What it didn't translate into was the consistent profit growth many
>> investors had expected by now. Lately profits have fallen, dragged
>> down by spending on new technology projects and on free-shipping
>> offers that Amazon considers marketing in place of TV ads. Analysts
>> expect full-year net income this year to come in at about $180
>> million, or half of last year's total. Most worrisome to investors
>> is Amazon's three-year-plus binge on new technologies. So far this
>> year its spending on technology and content, including hiring
>> hundreds of engineers and programmers to produce all these new
>> services and buy more servers to run them, is up 52%, to $485
>> million. As a result, operating margins, at 4.1% for the past four
>> quarters, now come in at less than Wal-Mart's 5.9%. Even Barnes &
>> Noble Inc. (BKS ), that doughty bricks-and-mortar book chain that
>> many expected to get remaindered by the Web, has higher margins, at
>> 5.4%. "I have yet to see how these investments are producing any
>> profit," gripes Piper Jaffray & Co. analyst Safa Rashtchy. "They're
>> probably more of a distraction than anything else."
>>
>> All that has investors restless and many analysts throwing up their
>> hands wondering if Bezos is merely flailing around for an
>> alternative to his retail operation. Eleven of 27 analysts who
>> follow the company have underperform or sell ratings on the stock--
>> a stunning vote of no confidence. That number of sell
>> recommendations is matched among large companies only by Qwest
>> Communications International Inc. (Q ), according to investment
>> consultant StarMine Corp. It's more than even the eight sell
>> opinions on struggling Ford Motor Co. (F )
>>
>> Neither analysts nor investors think Amazon's business is in danger
>> of collapse. It's just that they're slowly losing confidence in
>> Bezos' promises. The company's 2007 price-to-earnings ratio of 54
>> is much higher than its peers', even than high-flying Google Inc.
>> (GOOG ) at 35. But Amazon's stock is down 20% since the start of
>> the year. A 12% one-day jump on Oct. 24 reflected slightly better-
>> than-expected third-quarter results, but also investor relief that
>> Bezos plans to slow the growth of new tech spending.
>>
>> What's more, at the same time Bezos is thinking big thoughts,
>> Amazon's retail business faces new threats. Its 25% sales growth
>> tracks a little above the pace of overall e-commerce expansion and
>> nearly double its own pace way back in 2001. But other sites are
>> fast becoming preferred first stops on the Web. Google, for one,
>> has replaced retail sites such as Amazon as the place where many
>> people start their shopping. And more personalized and social
>> upstarts such as News Corp.'s (NWS ) MySpace and YouTube, which
>> Google is buying, have become the prime places for many people to
>> gather online--and eventually shop. It's a trend Amazon could have
>> trouble catching up to. Says consultant Andreas Weigend, Amazon's
>> chief scientist until 2004: "The world has shifted from e-business
>> to me-business."
>>
>> With all those problems, some might view Bezos' latest tech toys as
>> an attempt to take their eye off the ball. But spend some time with
>> Bezos, and it becomes clear there may well be a method to his
>> madness. Amazon has spent 12 years and $2 billion perfecting many
>> of the pieces behind its online store. By most accounts, those
>> operations are now among the biggest and most reliable in the
>> world. "All the kinds of things you need to build great Web-scale
>> applications are already in the guts of Amazon," says Bezos. "The
>> only difference is, we're now exposing the guts, making [them]
>> available to others."
>>
>> And, he hopes, making money. With its Simple Storage Service, or
>> S3, Amazon charges 15 cents per gigabyte per month for businesses
>> to store data and programs on Amazon's vast array of disk drives.
>> It's also charging other merchants about 45 cents a square foot per
>> month for real space in its warehouses. Through its Elastic Compute
>> Cloud service, or EC2, it's renting out computing power, starting
>> at 10 cents an hour for the equivalent of a basic server computer.
>> And it has set up a semi-automated global marketplace for online
>> piecework, such as transcribing snippets of podcasts, called Amazon
>> Mechanical Turk. Amazon takes a 10% commission on those jobs.
>>
>> Bezos is initially aiming these services at startups and other
>> small companies with a little tech savvy. But it's clear that
>> businesses of all kinds are the ultimate target market. Already,
>> Amazon has attracted some high-powered customers. Microsoft Corp.
>> (MSFT ) is using the storage service to help speed software
>> downloads, for instance, and the service is helping Linden Lab
>> handle the crush of software downloads for its fast-growing Second
>> Life online virtual world. Highly anticipated search upstart
>> Powerset Inc. plans to use the Amazon computing service, even
>> though it's still in test mode, to supplement its own computers
>> when it launches its service sometime next year. And the search
>> engine marketing firm Efficient Frontier uses Mechanical Turk to
>> determine the most effective keywords that drive traffic to Web  
>> sites.
>>
>> By all accounts, Amazon's new businesses bring in a minuscule
>> amount of revenue. Although its direct cost of providing them
>> appears relatively low because the hardware and software are in
>> place, Stifel Nicolaus & Co. (SF ) analyst Scott W. Devitt notes:
>> "There's not going to be any economic return from any of these
>> projects for the foreseeable future." Bezos himself admits as much.
>> But with several years of heavy spending already, he's making this
>> a priority for the long haul. "We think it's going to be a very
>> meaningful business for us one day," he says. "What we've
>> historically seen is that the seeds we plant can take anywhere from
>> three, five, seven years."
>>
>> A DARK HORSE IN A HIGH-STAKES RACE
>> Sooner than that, those initiatives may provide a boost for
>> Amazon's retail side. For one, they potentially make a profit
>> center out of idle computing capacity needed for that retail
>> operation. Like most computer networks, Amazon's uses as little as
>> 10% of its capacity at any one time just to leave room for
>> occasional spikes. It's the same story in the company's
>> distribution centers. Keeping them humming at higher capacity means
>> they operate more efficiently, besides giving customers a much
>> broader selection of products. And the more stuff Amazon ships,
>> both its own inventory or others', the better deals it can cut with
>> shippers.
>>
>> But there's much more at stake for Bezos than making a few extra
>> bucks selling services that his online store is already providing
>> for itself. This is nothing less than a bid to lead the next wave
>> of the Internet. A dozen years in the making, the economy that has
>> grown up with the Internet by most accounts remains in its infancy.
>> And leadership of that burgeoning economy remains up for grabs.
>>
>> Google and Microsoft, in particular, are each angling to be the
>> Net's kingpins: Just as Microsoft ruled the PC world (and its
>> profits) with Windows software, so Google and Microsoft want to
>> build what techies call the "platform" for the Web--the powerful
>> layer of basic services on top of which everyone else builds their
>> Web sites. "Amazon's a pretty serious dark horse" in that race,
>> says Internet visionary Tim O'Reilly, CEO of tech publisher
>> O'Reilly Media Inc. "Jeff really understands that if he doesn't
>> become a platform player, he's at the mercy of those who do."
>>
>> Bezos believes he has identified a unique Amazonian edge: Like no
>> other Internet or computer company today, the e-retailer is in a
>> position to apply the efficiencies of the Net to tangible and
>> corporeal assets like products and people. Bezos envisions
>> embedding the tasks of product distribution and knowledge work
>> right into the flow of more automated business processes such as
>> order taking and payment processing. For instance, a new service
>> called Fulfillment by Amazon lets small and midsize businesses send
>> their inventory to Amazon warehouses. Then when a customer places
>> an order, Amazon gets an automated signal to ship it out--no muss,
>> no fuss, no servers or software or garages full of stuff. "Amazon's
>> in the business of managing complexity," says Amazon director John
>> Doerr of the venture firm Kleiner Perkins Caufield & Byers.
>> "There's no other e-commerce player that does that."
>>
>> Mundane as these business-focused services may sound, the
>> implications for the economy at large are startling. Google,
>> MySpace, and YouTube cracked open for the masses the means to
>> produce media and the advertising that sustains it, creating tens
>> of billions of dollars in market value and billions more in new
>> revenues. Now, by sharing Amazon's infrastructure on the cheap,
>> Bezos is taking that same idea into the realm of physical goods and
>> human talent, potentially empowering a whole new swath of
>> businesses beyond the Internet itself.
>>
>> The upshot: While Wall Street yawns, Bezos' pioneering dot-com is
>> actually starting to look almost hip again, at least to the all-
>> important Web 2.0 geek gods who set the Net agenda today. More
>> importantly, some venture capitalists have noticed, and they're
>> encouraging their startups to consider using Amazon services to
>> save money and get to market faster. "Amazon is becoming a very
>> interesting company," says Crosslink Capital general partner Peter
>> Rip. "They're taking their store in the sky and unbundling it."
>>
>> In any case, this looks like Bezos' biggest bet since he and his
>> wife, MacKenzie, drove west in 1994 to seek fame and fortune on the
>> Net. Since then he has survived the dot-com boom and bust with his
>> ambitions intact. Now with three sons, and a daughter recently
>> adopted from China, Bezos still has managed to find time to start a
>> rocket company, Blue Origin. The venture is building a test
>> facility in West Texas not far from his grandfather's ranch, where
>> he once spent summers branding cattle. A longtime space nut, he
>> made a valedictorian speech in 1982 at Miami Palmetto Senior High
>> School about the need to colonize space.
>>
>> Amazon, however, commands his full attention, especially now that
>> the groundwork is laid for the company's latest transformation. He
>> began not long after the dot-com bust in 2001 with--big surprise--a
>> huge project to modernize Amazon's massive collection of data
>> centers and the software running on them. The result was that
>> Amazon made it much faster and easier to add new Web site features.
>> Small, fast-moving groups of five to eight Amazon employees now
>> could go hog wild with new ideas, such as customer discussion
>> boards on each product page and software to play music and videos
>> on the site. Since then these "two-pizza teams," which Bezos calls
>> them because each team can be fed with two large pies, have become
>> Amazon's prime innovation engines. "There's a huge value in this
>> small, nimble team approach," says tech consultant and author John
>> Hagel III. "But you can't do that without this kind of computer
>> architecture."
>>
>> Next came an epiphany: If the new computer setup allowed folks
>> inside to be more creative and independent, why not open it up to
>> outsiders, too? So in 2002, Amazon began offering outside software
>> and Web site developers access to selected Amazon data such as
>> pricing trends, gradually adding more and more until this year. Now
>> it's basically getting free help from more than 200,000 outside Web
>> developers, up 60% from a year ago. They're building new services
>> on top of Amazon technology, further feeding back into Amazon's
>> core retail business. One service, Scanbuy, lets people check
>> Amazon prices on their cell phones to see if they're better than
>> prices in a retail store.
>>
>> Starting a few months ago, Amazon upped the ante. It began offering
>> not just data but computing power, storage, and more, all intended
>> to turn even more of its internal operations into salable services.
>> One of the most interesting is Amazon Mechanical Turk. A couple of
>> years ago, Amazon needed to make sure photos it took of thousands
>> of businesses for the online Yellow Pages on its A9 search site
>> actually matched the right business. Computers are bad at
>> recognizing and sorting images, but people can do so very quickly.
>> So Amazon set up a Web site where it could farm out the sorting to
>> people for a penny or two per photo, clearly more for fun than for
>> big pay. Last November, it launched the site, naming it after an
>> 18th century chess-playing machine that actually had a real chess
>> master hidden inside it.
>>
>> NEW SPARK PLUGS FOR STARTUPS
>> Since its debut, the service has attracted thousands of "Turkers"
>> working for dozens of companies. They're doing jobs that Mechanical
>> Turk Director Peter Cohen says "couldn't be done at all before,"
>> because there was no economical way to gather people for these
>> tiny, often ephemeral tasks. Efficient Frontier has used the
>> service to analyze tens of thousands of search keywords to see
>> which best attract potential shoppers to particular Web sites.
>> "There have not been any other services like Mechanical Turk that
>> can do this so efficiently," says software engineer Zachary Mason.
>>
>> Forget for a moment whether this will eventually turn us all into
>> low-paid piece workers. The important thing is that the service is
>> nurturing startups. CastingWords co-founder Nathan McFarland uses
>> Turkers--who he says are largely the "bored and nothing-on-TV" set
>> who treat the tasks like crossword puzzles--not only to transcribe
>> 10-minute podcast segments but also to assemble them into full
>> transcriptions and to check the quality. Eighteen-year-old Eric
>> Cranston, a onetime Turker living with his parents in Visalia,
>> Calif., plans to use the service for a company he's starting that
>> will retouch photos for Web sites. Essentially, Bezos sees the
>> thousands of people from all over the world working inside
>> Mechanical Turk's online marketplace as a big "human computer."
>>
>> Amazon's other new services are getting even more serious
>> attention. Last March, Amazon introduced its Simple Storage
>> Service, which offers cheap space on its disk drives for any
>> programmer or business to use to store data. Right away, Amazon
>> approached an online photo-sharing startup called SmugMug Inc.
>> Ironic choice: President and co-founder Chris MacAskill had
>> fiercely battled Amazon in an earlier startup, an online bookstore
>> called Fatbrain, later bought by Barnesand- Noble.com (BKS ). But
>> his son Don, SmugMug's co-founder and CEO, says that when he heard
>> how easily and cheaply SmugMug could back up its photos on S3, "my
>> eyes got all big." Now, by zapping customers' photos to Amazon to
>> store on its servers, he's avoiding the need to buy more storage
>> devices of his own--and saving $500,000 a year. "Everything we can
>> get Amazon to do, we will get Amazon to do," says Chris MacAskill.
>> "You're going to see all kinds of startups get a much better and
>> faster start" by using Amazon's services.
>>
>> They already are. Consider Powerset, the secretive search startup
>> backed by A-list angel investors, including PayPal Inc. (EBAY ) co-
>> founder Peter Thiel and veteran tech analyst Esther Dyson. Co-
>> founder and CEO Barney Pell harbors ambitions of out-Googling
>> Google with technology that he says would let people use more
>> natural language than terse keywords to do their searches. By
>> analyzing the underlying meaning of search queries and documents on
>> the Web, Powerset aims to produce much more relevant results than
>> the current search king's.
>>
>> Problem is, Powerset's technology eats computing power like a child
>> munches Halloween candy. The little 22-person company would have to
>> spend more than $1 million on computer hardware, two-thirds of that
>> just to handle occasional spikes in visitor traffic, plus a bunch
>> of people to staff a massive data center and write software to run
>> it. That's when Pell heard about Elastic Compute Cloud. He was
>> sold. Based on tests so far, using the Amazon site for part of the
>> company's computing power could cut its first-year capital costs
>> alone by more than half.
>>
>> Not least, Amazon is now opening its vast network of more than 20
>> distribution centers worldwide to all comers. For years it has
>> handled distribution and even Web site operations for the likes of
>> Target Stores Corp. (TGT ) and Borders Group (BGP ). Recently it
>> has started providing customized handling, packing, and customer
>> service people for upscale retailers and manufacturers such as
>> fashion boutique Bebe. And with Fulfillment By Amazon, it's opening
>> all that up to small and midsize businesses.
>>
>> With all these initiatives, Amazon empowers new startups, which are
>> hungry to knock off Internet leaders that happen to be...Amazon
>> competitors. Has Bezos thought about how he may be creating an army
>> of allies to fight his rivals? His answer: "Absolutely!"
>>
>> It's hard to dismiss another possibility, though: Amazon is biting
>> off more than it can chew. Some of the new tech projects have come
>> out with a thud. Compared with Google's, Amazon's A9.com search
>> site never got traction, and its features were recently downsized.
>> The new Amazon Unbox Video downloading service struck many early
>> reviewers as clunky and slow.
>>
>> Mostly, it's unclear whether Bezos can escape his and Amazon's
>> linoleum-floor image. Amazon's mission to be the place where
>> "customers can find and discover anything they might want to buy
>> online" doesn't especially mesh with the goal to be the prime
>> source of services needed to run an Internet Age business. By
>> contrast, nearly all of Google's services are clearly aimed at
>> building the dominant digital utility. Likewise, IBM (IBM )is much
>> better known as a provider not only of technology services but also
>> of expertise in automating a wider range of business processes,
>> from inventory management to sales tracking. Can Bezos manage a
>> company that simultaneously sells the most routine stuff to
>> consumers and the most demanding business services to entrepreneurs
>> and corporations?
>>
>> So it is that Jeff Bezos faces a managerial moment of truth. Having
>> saved Amazon from oblivion years ago, he still must prove his
>> latest big bet can help transform the company into something truly
>> enduring. Not only does he make no apologies for such wagers, he
>> revels in them. Every year in his annual letter to shareholders he
>> resurrects his 1997 letter, which reads in part: "We will make bold
>> rather than timid investment decisions where we see a sufficient
>> probability of gaining market leadership advantages."
>>
>> Today, it's just the same. "We are willing to go down a bunch of
>> dark passageways," he says, "and occasionally we find something
>> that really works." As always, investing in Bezos and his company
>> will require faith that there's light at the end of his newest
>> tunnel--not just a money pit.
>>
>> Mark Linesch: Open Grid Forum (OGF): Hewlett Packard
>> 281-514-0322 (Tel): 281-414-7082 (Cell) mark.linesch at hp.com :
>> linesch at ogf.org
>>
>>
>> --
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>
> [Bicycle crash boiler plate: I will include this boiler plate in my
> mails for a few weeks to apologize for terseness in the rest of the
> mail.  I have a broken finger from the crash on Oct 4th, and typing
> is hard and possible only in short spurts. Sorry, Dave.]
>
> -- 
>
> Take care:
>
>      Dr. David Snelling < David . Snelling . UK . Fujitsu . com >
>      Fujitsu Laboratories of Europe
>      Hayes Park Central
>      Hayes End Road
>      Hayes, Middlesex  UB4 8FE
>
>      +44-208-606-4649 (Office)
>      +44-208-606-4539 (Fax)
>      +44-7768-807526  (Mobile)
>
>
>
>
>
>
>

[Bicycle crash boiler plate: I will include this boiler plate in my  
mails for a few weeks to apologize for terseness in the rest of the  
mail.  I have a broken finger from the crash on Oct 4th, and typing  
is hard and possible only in short spurts. Sorry, Dave.]

-- 

Take care:

     Dr. David Snelling < David . Snelling . UK . Fujitsu . com >
     Fujitsu Laboratories of Europe
     Hayes Park Central
     Hayes End Road
     Hayes, Middlesex  UB4 8FE

     +44-208-606-4649 (Office)
     +44-208-606-4539 (Fax)
     +44-7768-807526  (Mobile)