WEB 2.0: Amazon Web Services losing money

Amazon.com's Web services business isn't profitable, but it's growing very rapidly and the company expects it to make money eventually, according to Chief Executive Officer Jeff Bezos.

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Amazon.com's web services business is not profitable, but it is growing very rapidly and the company expects it to make money eventually, according to chief executive Jeff Bezos.

Amazon Web Services, launched in 2004, provides hosted IT infrastructure services for developers in areas like storage and server computing. It is Amazon's newest business and Bezos is convinced it will succeed because there is rising demand from companies large and small for offloading IT infrastructure work to a third party, Bezos said at the Web 2.0 Expo event in San Francisco on 16 April.

For example, S3, Amazon’s hosted storage service, has grown exponentially, from having 800,000 objects stored in mid-2006 to over 5bn today, Bezos said, the first time he has disclosed usage figures for the service.

"Managing bandwidth, buying servers, negotiating with hosting companies: none of this stuff helps your idea be any better or gets your product faster to market," said Bezos in a keynote speech during which he also answered questions from Tim O'Reilly, founder and chief executive of O'Reilly Media, one of the event's organizers.

Instead, Amazon is an expert at these tasks, and can provide them on-demand, charging customers only for the storage or server capacity they use, he said. Amazon Web Services' clients currently range from global companies like Microsoft to tiny start ups that have decided to delegate back-end tasks on Amazon like hardware provisioning and software maintenance.

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