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Ahead in the Cloud

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Cloud computing is ideal for many small businesses.

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As Amazon holds it weeklong Black Friday sale, it's easy to forget that the gigantic retailer has cultivated a virtual computing ecosystem that has fundamentally changed American business, particularly small business. Since it launched in 2006, Amazon Web Services has operated from a very basic premise: Leverage the company's massive investment in infrastructure by offering online computing power—known as "the cloud"—on the cheap. All a founder needs to get a business up and running on Amazon is a credit card and a dream.

The strategy has been lucrative. AWS takes in an estimated $650 million in revenue and has a 60 percent share of the small-business market for cloud computing. Without the Amazon cloud, many new businesses that have little cash to expend might not exist. It also has launched a cottage industry of startups that serve entities mystified by cloud computing, a market now estimated at anywhere from $11 billion to $58 billion. As more and more businesses turn to online computing infrastructure, platforms, and applications, and as companies such as IBM, Microsoft, Verizon, Cisco, Oracle, and others enter the space to serve larger, more complex organizations, will Amazon's strategy of offering bare-bones computing mostly to young and small businesses endure?

AWS is hardly coasting. Like Google, Amazon constantly releases new products to see which ones stick. In recent weeks, it has made some noteworthy announcements. Often criticized unfairly over security and compliance concerns, it received certification for a global security standard that sets out requirements for handling sensitive information. It also released a product that is insanely fast at doing mathematical computations. These moves follow the recent establishment of a free trial for businesses that want to start on the cloud. And AWS recently landed Netflix as a client.

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