Amazon luring new customers with Web Services business

After Amazon.com reported a 250 percent leap in second-quarter profits on Tuesday, CEO Jeff Bezos plugged its Amazon Web Services business and shined some light on the company's rationale for continued investment in it.

In response to a question from a financial analyst about the traction on the company's hosted computing and e-commerce Web services, Bezos argued for Amazon's long-term commitment to the nascent business.

"So we're very optimistic about the long-term potential. It's still very early, but we're working very hard on this, and we think it's, in the long-term, a very important business," Bezos said.

Obviously, Amazon thinks it can make money offering hosted computing services. But Amazon Web Services serves another purpose: expanding its customer base beyond online shoppers.

"We are very, very glad and we feel very lucky to have this new set of customers to work with, these developers," Bezos said, noting that its hosted services have attracted Web developers as well as start-ups, individuals and large corporations.

Even with the up-beat assessment, it appears that Bezos needs to keep making the case for Amazon Web Services to financial analysts.

As Larry Dignan at ZDNet points out in his second-quarter coverage, when Amazon disappointed investors, analysts were quick to criticize the company for its big technology investment--clearly necessary to run a large-scale hosting business.