Amazons New Store Utility Computing Information Technology Essay

With the leadership of the dynamic, young chief executive and co-founder Jeff Bezos known as the king of cyber commerce, who started a business with selling books from his house basement in a Bellevue garage to creating Seattle’s biggest Internet venture, Amazon made the first sale on the cyber and crossed the borders with its invention that gave millions of people the opportunity to sell and buy online with ease and freedom.

Amazon the world’s largest online retailer was probably the first truly worldwide community that was built online with allowing average consumers to create online product reviews and gave them the opportunity to research them before buying. (Frey, & Cook, 2008)

Since its toddler years, Amazon creation was based on new and invented ideas which no one has made before, first by adopting the explosion of cyber era and creating the first online store which gave consumers easy access to products they never seen before with a feasible price they will not find in the retail stores, then Amazon astonished the public by providing the first online community that allows consumers to create product reviews and gave them a chance to closely know and research the products before they buy them.

In despite of losses that exceeded a billion dollar in its early years, Amazon didn’t stop its continuous improvements and revolutionary products and services with introducing new concepts and technologies which are completely new inventions no one made before which have an extensive advantage and promise in the advancement of the whole world. One of Amazon’s recent great inventions in the cyber is cloud computing, also known as on-demand computing or utility computing which will be our main concern in the discussion of this case study and to discover how Amazon which is not known as a technology company exceeded its reputation as a retailer and possessed an infrastructure considered by many to be among the most robust in the world and getting ahead of technology companies like IBM, HP, and Sun Microsystems with offering utility computing without requiring service-level agreements. (Laudon, 2010)

Also among our study of Amazon’s cloud computing, we will compare other suppliers of utility computing and exhibit the services they provide, their availability promise, payment model, and their target clients in comparison to new services offered by Amazon’s utility computing.

Furthermore, I will go through some of the IT infrastructure hardware and software components which are explained in chapter five of the Laudon, K. C., & Laudon J. P., Management Information Systems textbook and discuss their relevant to Amazon’s case; also we will describe how these components fit into Amazon’s Web services and/or the customers that subscribe to these services.

In the last part of our discussion, I will try to discuss an idea of a Web-based startup business and explain how this business could utilize Amazon’s S3 and EC2 services which should give us a practical example of a real live scenario.

Cloud Computing: What Is It Really?

There has been a huge amount of Hype around the term “Cloud Computing”, with people wanting to move “Applications on the Cloud”, or Security on the Cloud and now even talks of an OS on the Cloud. The question for folks who have just heard of the term typically is, what really is Cloud Computing and How is it going to change things in IT? (Raghupathi, 2009)

So let’s first explain in more detail the concept of cloud computing and what it does, so we can understand the whole story and discover its pros and cons.

“Well Cloud Computing has recently emerged as one of the very hot technology trends and is quickly turning into a game changing trend given the significant implications that it can have on all of IT and IT driven businesses. Cloud Computing as the term indicates implies using the Cloud Infrastructure or Internet Based Shared Infrastructure to host and access critical business and personal applications. Typically it involves hosting applications and their corresponding data on shared servers on the Internet and accesses the applications through a browser.” (Raghupathi, 2009)

“Today Cloud Computing changed the way of IS with complete shift from a desktop based model. Most applications have been installed on desktops and are used locally and typically needs to be installed on each desktop that needs to access that specific application or data. With the Cloud computing model, applications are Web Based hosted on a Cloud Server and users can access their applications and data from any machine which has a browser and Internet access. Also Cloud Computing change the way of hosting Applications and services. Today most businesses own and operate their own servers within their network firewalls and host and maintain their application and servers. This typically adds an additional overhead for companies to maintain their infrastructure and is typically sub optimal in terms of utilization of resources. Moving the Cloud model involves businesses hosting their applications and services on third party servers using shared resources.” (Raghupathi, 2009)

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Amazon’s Technology Services

Amazon provides cloud computing, also known as on-demand computing or utility computing. Similar to other utility providers like electric, water, and natural gas, Amazon provides computing capacity to businesses that want to pay only for what they use. (“IT Infrastructure”, 2009)

“Amazon can generate extra revenue from other businesses by offering its excess capacity to those that need it. Like most companies, Amazon used only a small portion of it total computing capacity at any one time. Its infrastructure is considered by many to be among the most robust in the world.” (Laudon, 2010) Subscribers to the Simple Storage Service (S3) can use only what they need without having to purchase their own hardware and software. That reduces the total cost of ownership for small and medium-size businesses. The system is scalable and reliable for both Amazon and subscribers. The Elastic Compute Cloud (EC2) service enables businesses to utilize Amazon’s servers for computing tasks without having the overhead costs. Risks associated with incorporating the technology are minimal for businesses-Amazon takes most of the risks.

Companies may want to go with more established names in computing; Amazon is not known as a technology company-its reputation is more as a retailer. It’s combating this perception by not requiring service contracts. However, its “competitors like IBM, HP, and Sun Microsystems may follow Amazon’s lead and offer utility computing without requiring service-level agreements. “Some companies are wary of using a supplier that doesn’t offer SLAs which guarantee the availability of services in terms of time. The growth of Amazon Web Services (AWS) could be harmful to its Web services line as well as its retail line if the company doesn’t position itself to handle a dramatic increase in demand on its infrastructure.” (Laudon, 2010)

Customers may experience outages in the service and not have any recompense since there are no service level agreements-only Amazon’s word that it will maintain 99.9 percent availability. (“IT Infrastructure”, 2009)

Businesses, large and small, can benefit from using AWS. The service relieves small business from the TCO of having its own systems. AWS creates the opportunity for others to work at Web scale without making the mistakes that Amazon has already made and learned from. Large businesses can use AWS as an auxiliary unit without having to increase their hardware and associated TCO. (Laudon, 2010)

In my perspective, Amazon made a great shift in the IT field with the introduction of Cloud Computing services. Having the ability to run many applications on many different operating systems and storing your data through a web browser for a fraction of a dollar with no need to multiple devices or operating systems is really awesome. In using Amazon’s services, individuals and especially developers have more advantage than mid-size or large businesses because they can’t afford to have many devices or systems if they want to try different applications or operating systems but with using Amazon’s services everyone will have the opportunity.

To learn how Amazon Web Services enables you to achieve your goals with great flexibility, go to Amazon Web Services site and sign up to free account and explore the potentials of Cloud Computing

Figure Home Page Of Amazon Web Services

Source: http://aws.amazon.com/

Capacity planning, scalability, and TCO

Amazon must provide hardware capacity planning and scalability for not just its own needs but for all its subscribers. Overestimates will create a drain on Amazon’s financial assets. Underestimating capacity and scalability will create shortages for its own business and its subscribers. Too many instances of non-availability will create the impression that Amazon can’t manage the service. Estimating scalability for such a large, diverse number of users without breaking down is a huge task. Amazon must bear the total TCO of its services, all the while ensuring it can profit from it. The services’ subscribers benefit from not having to worry about these issues and not bearing the brunt of TCO issues. (“IT Infrastructure”, 2009)

I think Amazon should pay a serious attention to the capacity and scalability issues because these two factors may lead to the demise of Amazon. Amazon should plan a head to increase its capacity due to the proliferation of its AWS and the growing number of subscribers to its cloud computing services.

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Utility Computing Suppliers

There are many different suppliers of utility computing and everyone provide different services with different prices and variety of targeted clients, even though Amazon is considered to be the cheapest utility computing supplier which made it possible to everyone to have a chance of trying and implementing this new trend of technology. In the table below we will compare Amazon to other two suppliers based on different criteria.

Criteria

Amazon

Sun Microsystems

Hewlett-Packard HP

Available Services

Amazon provides cloud computing through Web Services, Simple Storage System (S3), and Compute Cloud (EC2)

offers utility computing through grid computing

provides utility computing for PCs, server storage, mail and messaging, print, and centralized data center infrastructure through its distributed grid technology.

Target Clients

Serve start-up businesses because it has been geared towards small and medium sized businesses since its inception. It doesn’t bring the same baggage to the table as the larger, more diverse companies do

It provides platforms for its target users in computational mathematics, computer aided engineering, electronic design automation, financial services, life sciences computing tasks. Software developers

It targets small, medium and large sized companies for a variety of computing services

Price

15 cents per 1 gigabyte of stored data per month and charge 10 cents per CPU hour

It charges $1 per CPU hour

Costs were not available on its web site

Availability

It promises 99.9 percent availability

It promises 99.9 percent availability

99.9 percent

If I decide to launch a start-up web business, I will definitely choose Amazon for my web services and needs, also I believe most of us will be in the same track as I did because Amazon is the cheapest supplier and it has been geared towards small and medium sized businesses since its inception and It promises 99.9 percent availability. Furthermore, everyone when starts a business especially online will always look for efficient and affordable services.

Amazon’s IT infrastructure

Amazon’s Web services use the following hardware components: (“IT Infrastructure”, 2009)

client/server architecture as the server

grid computing

distributed processing

storage area networks

virtualization

multi-core processors

Customers using Amazon’s Web services utilize the following hardware components: (“IT Infrastructure”, 2009)

client/server architecture as the client

distributed processing

storage area networks

Amazon’s Web services use the following software components: (“IT Infrastructure”, 2009)

Linux and Unix operating system software

Java, Ajax, and HTML as the provider

XML

Software as a Service (Saas) as the software provider

Customers using Amazon’s Web services utilize the following software components: (“IT Infrastructure”, 2009)

Windows operating system or Mac OS

Java, Ajax, and HTML as the recipient

Software as a Service (Saas) as the software user

Mashups, widgets, cloud computing could be used by customers

Startup Business Utilizing Amazon’s Utility Computing

Every student knows how expensive is buying text books directly from the college/university book store which most of us sometimes cannot afford if want to graduate without a heavy load of student loans. My startup business idea will be based on this issue in which I will try to give students an affordable source for buying textbooks and then selling them back at the end of the semester.

My startup business will be an e-commerce website the give the users the ability to buy or sell textbooks online or give them an option to buy electronic version of the text book they need which is in common more affordable than buying a hard copy.

Every new user will sign up for a free account and provide his/her Name, Address, DOB, University/College, School Year, Major, and Last Semester. Then based on this information which the user just entered, I will add his university, major, and current term to my database of universities, their majors, terms, and related courses with the required text books.

The users will have three options: buy a used book which is available and offered by another user, list his/her book for sale, or buy an electronic version of the text book. The users will have the freedom to put the prices they want to sell their text books for, in case they want to buy a text book they are free to accept the listed price or to negotiate with the seller to further reduce the price, the last option will be a fixed price for the electronic version of the text book which I will get from other providers and add a three dollars as a profit. When users sell their text books, they will pay three dollars for listing fee.

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This startup business will utilize the following Amazon’s web services:

Amazon Elastic Compute Cloud which delivers scalable, pay-as-you-go compute capacity in the cloud. (“Amazon Web Services”. 2010)

Amazon SimpleDB which works in conjunction with Amazon S3 and Amazon EC2 to run queries on structured data in real time. (Amazon Web Services. 2010)

Amazon Simple Storage Service that provides a fully redundant data storage infrastructure for storing and retrieving any amount of data, at any time, from anywhere on the Web. (“Amazon Web Services”. 2010)

Utilized EC2 and S3 of the proposed system

Our e-commerce website which will provide students with affordable text books will have the below EC2 and S3features:

“Instance type is a Standard Instance and this family of instances is well suited for most applications. At the start up of the business we will choose Small Instance (Default) 1.7 GB of memory, 1 EC2 Compute Unit (1 virtual core with 1 EC2 Compute Unit), 160 GB of local instance storage, 32-bit platform which will be more than enough at the first year of launce.

Operating System: we will run the website on the Amazon Linux AMI

Databases: we will run the website on Oracle Database Management System which is the most reliable and famous among DBMS.” (“Amazon Web Services”. 2010)

In the first year of the business launch, we will run the website utilizing EC2 and S3 by choosing the basic plans which are cost effective because at this time our online book store will still unknown and in its early stage and we need to focus our attention on marketing and promoting the website. At this stage, we will not consume a huge amount of data storage or data transfer bandwidth, so choosing basic plans of EC2 and S3 will be more than enough to run our business for its first year of launch.

After the first or second year of the launch, if we notice the website is getting well known and we have thousands of users and sales transactions, we can decide and make a plan of expanding our EC2 CPU instance and S3 data storage which can be implemented easily in Amazon AWS without even service interruption.

Figure Snapshot of Proposed EC2 Implementation

Source: http://aws.amazon.com/

Figure Snapshot of Proposed Amazon S3 Features

Source: http://aws.amazon.com/

Figure Snapshot of Proposed Amazon SimpleDB

Source: http://aws.amazon.com/

Costs Associated With Utilizing EC2 and S3 Services

The total implementation cost of our proposed business based on the selected plans of EC2, S3, and Amazon Simple DB is depicted in the figures below using Amazon AWS Simple Monthly Calculator

Figure Estimates of Implementation Costs

Source: http://aws.amazon.com/

Figure Costs of S3

Source: http://aws.amazon.com/

Conclusion

Today Cloud Computing changed the way of IS with a complete shift from a desktop based model. The term Cloud Computing implies using the Cloud Infrastructure or Internet Based Shared Infrastructure to host and access critical business and personal applications. Typically it involves hosting applications and their corresponding data on shared servers on the Internet and accesses the applications through a browser. ” (Raghupathi, 2009)

Amazon was smart to bet early and bet big on the cloud computing opportunity and has transformed the computing landscape and nurtured what is generically known as the cloud computing industry. By turning expensive storage and computing hardware into a billable service, it has opened up new vistas for entrepreneurs and made corporations rethink how they build and use their computing and storage resources. (Malik, 2010)

Amazon gave the opportunity to thousands of individuals to have an affordable access to their full line of computing and web services with pay-as-you-go rule and without any contracts or agreements. Also costs are billed per consumption, so no one get charged while not using Amazon’s web services.

Amazon has twelve AWS product lines, EC2 and S3 are the most services that compete in this subcategory. AWS essentially ‘rents out’ IT infrastructure to companies that seek to outsource IT needs such as Application Hosting, Web Hosting, High Performance Computing, Storage, E-Commerce, and more. (Malik, 2010)

Utilizing some of Amazon’s web services and cloud computing technologies we can manage to start up a effective and powerful business with an affordable monthly payment without a need to an expensive startup costs which result from buying PCs, servers, and other software applications which are critical components required for the operation of any new business.

Figure Amazon’s Web Services Infrastructure

awsplatformexplained.gif

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