Stephen E. Arnold: Amazon Growth, Search, & Costs — the Google Killer?

Advanced Cyber/IO, Commerce
Stephen E. Arnold
Stephen E. Arnold

Amazon: Unrelenting Growth, Search, and Costs

I noted the Netcraft data which were presented in “Amazon Web Services’ Growth Unrelenting.” Amazon is a sprawling online services company. The firm hit on the idea of becoming a cloud provider years ago. The write up presents a diagram which uses a log scale (check with an attorney for what this means). The lines show growth in host names, active sites, and computers. What’s not to like?

Search vendors struggling to generate revenue have embraced the cloud as a way to reduce the on premises’ costs of deploying a content processing solution. Again: What’s not to like? Ease, convenience, and the perceived reliability of Amazon, the creation of a Wall Street wunderkind?

Amazon is in the search business. The system, as I understand it, requires that content be assembled to the Amazon specification. Once in the Amazon search system, all sorts of goodness is available to the person who wants to use the “native” Amazon search system. Other search vendors have embraced Amazon. Two examples are the still-in-start-up mode Digital Reasoning and X1 (search not the aircraft).

A couple of observations.

First, Amazon has to find a way to manage its costs. These have been rising over the last few years. No problem, of course. However, if the growth slows. Problem, of course.

Second, Amazon uses a variant of taxi meter pricing. Licensees may want to check into how the various fees for a search service operate.

Third, Amazon is piling on the search systems. The company has an internal development team beavering away. Search vendors are happily loading their software into the Amazon system. I wonder if Amazon will be learning about search and functions. Decisions are much easier to make when one has a bird’s eye view of market behavior.

Now what’s this have to do with search? My hypothesis is that Amazon will try to do with search what it has with streaming media, eBook readers, and discounted goods.

Are search vendors nervous about Amazon? Nah, search vendors are trying to make sales often without looking beyond meeting payroll. Exciting times ahead.

Stephen E Arnold, July 3, 2013

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