Amazon's woes turn wake-up call for cloud computing

This development may see firms reconsider relying on remote PCs

 The Foursquare Web site, as well as some other sites using Amazon Web Services, have had problems in the last two days. “This is a wake-up call for cloud computing,” said Matthew Eastwood, analyst at IDC, using the term for accessing services and information in big data centres remotely over the Internet from anywhere, as if the services were in a cloud. “It will force a conversation in the industry.”

That discussion, he said, will most likely centre on what data and computer operations to send off to the cloud and what to keep inside the corporate walls.
But another issue, Eastwood said, will be a re-examination of the contracts that cover cloud services — how much to pay for backup and recovery services, including paying extra for data centres in different locations. That is because the companies that were apparently hit hardest by Amazon interruption were start-ups that, analysts said, are focused on moving fast in pursuit of growth, and less apt to pay for extensive backup and recovery services.

Amazon set up a side business five years ago offering computing resources to businesses from its network of sophisticated data centres. Today, the company is the early leader in the fast-growing business of cloud computing. In business, the cloud model is rapidly gaining popularity as a way for companies to outsource computing chores to avoid the costs and headaches of running their own data centres — simply tap in, over the Web, to computer processing and storage without owning the machines or operating software.

Amazon has thousands of corporate customers, from Pfizer and Netflix to legions of start-ups, whose businesses often live on Amazon Web Services. Those reporting service troubles included Foursquare, a location-based social networking site; Quora, a question-and-answer service; Reddit, a news-sharing site; and BigDoor, which makes game tools for Web publishers.

The problems companies reported varied, but included being unable to access data, service interruptions and sites being shut down. Amazon’s Web page on the status of its cloud services said matters were improving but were still not resolved.

Big companies, that have decided to put crucial operations on Amazon computers are apt to pay up for the equivalent of computing insurance, analysts say. Netflix, the movie rental site, has become a large customer of Amazon cloud. Most of its Web technology — customer movie queues, search tools and the like — runs in Amazon data centres.

The long-term toll to cloud computing, if any, is uncertain. Corporate cloud computing is expected to grow rapidly, by more than 25 per cent a year, to $55.5 billion by 2014, IDC estimates.

Major technology suppliers are aggressively promoting different cloud offerings — some emphasising a utility-style service, like Amazon, and others focusing more on selling big companies the hardware and software to more efficiently juggle computing workloads. The latter use the cloud technology, but companies own and control them — so-called private clouds. The Amazon interruption, said Lew Moorman, Chief Strategy Officer of Rackspace, a specialist in data center services, was the computing equivalent of an airplane crash. It is a major episode with widespread damage. But airline travel, he noted, is still safer than traveling in a car — analogous to cloud computing being safer than data centers run by individual companies.

The Amazon setback, he said, should prove to be a learning experience. “We all have an interest in Amazon handling this well,” said Moorman, whose company is a competitor in the cloud business.