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Will Amazon Become The King of Web Hosting Too?

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Amazon’s (s AMZN) web services (AWS) are on track to being a half-a-billion dollar business. They’re home to some of the hottest startups on the planet. Even older startups use their infrastructure. And despite all the false rumors, pharmaceutical giant Eli Lilly is a customer (s lly). Ironically, the company which put the “cloud” in cloud computing has found a fast growth opportunity in a decidedly old fashioned business — web hosting.

While the company’s web services continue to gain traction with folks looking for on-demand compute resources, AWS has seen an uptick in folks using it for steady-state applications (a euphemism for web hosting), according to Adam Selipsky, Amazon Web Services’ vice president of product management and developer relations, who stopped by at our offices to discuss various Amazon Web Services initiatives.

Newsweek and the PBS network are using AWS for hosting their web sites. In addition, large e-consulting firms such as Digitaria and Razorfish are adding a few thousand sites a year to Amazon, Selipsky said. ?From movie sites to hosting apps for large brands, Amazon suddenly (and perhaps unintentionally) finds itself competing with thousands of web hosts. As more and more media companies integrate Internet and mobile applications into their overall product mix, they’re likely to spend more on their infrastructure needs.

Just as Dell (s dell) and their ilk benefitted from close ties with old-fashioned consultancies and sold a lot of hardware to their clients, Amazon can now find itself benefiting from the growth in demand for the services of these new e-consultants. ?These e-consulting firms are pretty influential, especially when it comes to attracting corporate clients. For instance, Digitaria client Hasbro (s has) is hosting the website of its Monopoly game on AWS. It cost the company nearly half of what it would have cost on a traditional hosting set-up. (More details here.)

The looming presence of AWS in this market should worry current players such as RackSpace (s RAK) and The Planet (which is said to be in the process of merging with SoftLayer, another hosting company).

Related Research from GigaOM Pro (subscription required): The Evolution of the Private Cloud

11 Responses to “Will Amazon Become The King of Web Hosting Too?”

  1. Daniel Golding

    Except that AWS is currently uneconomical for hosting web sites. Check out their cost structure vs any of their competitors.

    I know that GigaOM is in love with all things cloud, but the economics have to work, and here they do not.

    And, of course, the two companies you mentioned – Softlayer and Rackspace – have cloud as the engines of their growth, as evident from Rackspace’s K’s and Q’s.

    One last point – traditional web hosting is the least profitable aspect of the hosting industry.

  2. Iqbal Gandham


    I think all amazon needs is to have a package which suits the ‘slicers and dicers’ that companies like netsol and godaddy do so well with, where you can buy a lump of space and carve it up. Amazon lends itself well to this, since it is already carved up, but the front end panels like plesk, cpanel all need to get added.

    Question is will amazon do it themselves, or will they just wait for someone else to setup a hosting business using there infrastructure (which is what most resellers have done).

    I had a look at the setup about 3 yrs ago, since any hosting company worth its salt these days would be looking at deploying a sw layer like amazons across servers in order to make maximum usage of their hardware…and I believe a few are looking at this market.

    Current problem with amazon is price, hosting (shared etc) which is still the most popular in countries such as India, is very cheap, you cannot do that with amazon, unless you can split it ‘base machine’ further.

    Iqbal Gandham
    (Past life building web hosting comps)

  3. While I agree with Dave, I think it is matter of time before AWS puts their act in place to leverage the market potential that is coming their way. I would put my bet on AWS. I was skeptical about them even until the beginning of this year.

  4. Companies like RAX have a good strategy in dealing with the AWS threat. It’s something I predicted when EC2 launched, that they would threaten traditional hosters, and have spoken at a number of events to that effect.

    Unfortunately a lot of Hosters still have their heads down trying to sell the same old services and not innovating at all. Between Google and Rackspace and AWS they will really start to struggle unless they react soon.

  5. The battle for developer friendly tools continues to accelerate. Apple and iOS set a new standard, one that everyone is frantically rushing to follow. The ultimate king of we hosting, be it AMZN or RAX will be dependent upon who provides the developers with the richest toolsets to quickly design, develop, deploy and manage applications.

    Presently, from everything I’ve been able to uncover, AMZN has a slight lead here.

    This being the case, I would not be surprised to see a series of announcements from RAX through the remainder of this year and well into 2011 as they look to stake this claim.

  6. Om, they’re missing a key feature for web hosting — index files.

    Suppose I put a website on S3 and map a domain to it:

    Try going there, you’ll get an XML error return.

    But… it does have an index file.

    All Amazon has to do is make the first URL work, which is how web servers work by default, and boom they’re in the web hosting business.

    Without it, all we can use it for is to store images, MP3s, JavaScript snippets, archives.

    I’d love to see them do it, then I could move my archived static sites up to S3 and forget about them.