Why is Amazon hiring like a drunken sailor?

jeffbezoswithkindlefire

The most striking thing about Amazon’s fourth-quarter and year-end numbers was that the company’s head count was up a whopping 67 percent to 56,200 employees, compared with 33,700 a year ago, according to Amazon’s new 8-K filing. Sixty-seven percent is a very big number — even for Amazon.

While most of the questions on Amazon’s earnings call on Tuesday night focused on the Kindle Fire business, Justin Post, an analyst with Bank of America Merrill Lynch, tried to get Amazon to drill down into that 67 percent head count growth, which — he pointed out —  was “quite a bit higher than units or revenue growth.” But Amazon CFO Thomas Szkutak didn’t bite. “The majority of those increases are in our operations and customer service area . . . it’s in support of the growth,” Szkutak said.

Given Amazon Web Services’ push into enterprise computing, smart money is that a good chunk of those workers are supporting AWS users, not selling or otherwise dealing with Kindles or book sales.

Earlier this week, Amazon announced new premium support options for EC2. The company added Amazon-fielded support for third-party software including Windows and Red Hat Linux operating systems and Apache and IIS web servers running on Amazon infrastructure.

According to the AWS blog post by AWS evangelist Jeff Barr:

If you have Gold or Platinum Premium Support, you can now ask questions related to a number of popular operating systems including Microsoft Windows, Ubuntu, Red Hat Linux, SuSE Linux, and the Amazon Linux AMI. You can ask us about system software including the Apache and IIS web servers, the Amazon SDKs, Sendmail, Postfix, and FTP. A team of AWS support engineers is ready to help with setup, configuration, and troubleshooting of these important infrastructure components.

As most in the enterprise IT world can attest, support engineers do not come cheap. And with a customer base as large as Amazon’s, it will need quite a few. The margins may be higher on sales of such enterprise services, but they also require a greater deal of customer support. And customer expectations for that support are much higher. Enterprise IT companies like EMC, Oracle and IBM know this. They typically offer a range of support options, including on-site hand-holding if needed. It is unclear to some whether Amazon does.

Currently, Amazon Platinum tier service costs either $15,000 per month or 10 percent of total AWS usage for that period, whichever is higher. (The Amazon support pricing is posted here).

There is a healthy debate about whether Amazon, which built its empire on the razor-thin margins of bookselling (and some would say Infrastructure-as-a-Service offerings) really wants to enter the world of higher-margin enterprise software and services, which require a higher level of hand-holding and support than Amazon has offered in the past. This news about bulked up support for AWS  is a sign that it does intend to go there.

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