Is Amazon Planning a Cloud Encoding Service?

Amazon (s AMZN) may be looking to add a new cloud encoding service to its web services portfolio, according to sources. While creating a new cloud-based encoding service would fit neatly into its Amazon Web Services (AWS) plans, it could also potentially displace some customers who leverage its infrastructure for their own cloud encoding services.

Sources say Amazon is rumored to have purchased a number of encoders from Seattle neighbor Elemental Technologies (located in nearby Portland), and it plans to use those encoders for a new encoding service that it will add to its AWS portfolio. Elemental makes encoders that rely on parallel GPU processing, as opposed to usual CPU processing, for video transcoding.

That would mean Amazon adding additional infrastructure to support the new servers, but customers have repeatedly asked the company for a GPU cloud service, and the performance tradeoff could be worth it: Elemental claims that using the GPU for transcoding can be 5-10 times faster than using the CPU, so a single Elemental Server can do the job of seven dual quad-core CPU servers. Elemental couldn’t be reached for comment, but sources in the encoding industry confirmed that Amazon has been investigating different options for encoders.

With its Simple Storage Service (S3) and CloudFront CDN offerings, which now includes streaming, it already has two parts necessary for web video delivery. By rolling out its own encoding service, Amazon would be one step closer to having a one-stop shop for IP video delivery. Some media companies — most notably Netflix (s NFLX) — already rely on Amazon’s EC2 cloud computing for cloud-based encoding.

That said, if Amazon launches a cloud encoding service, it will be competing directly against some of its own customers, who use EC2 to power their own encoding offerings. That includes HD Cloud, Zencoder and — the last of which was a finalist in Amazon’s 2008 Start-Up Challenge.

Image courtesy (CC-BY-SA) of Flickr user akakumo.

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