Amazon wooing start-ups to its Web Services

When I think of Amazon, I think of all the money I spend there buying books and CDs. But the company isn't just focused on selling Harry Potter books online to school kids anymore.

Amazon is trying to lure start-ups to sign up for its Amazon Web Services, which offers storage, virtual server, payment and other services on a pay-per-usage basis. This makes sense for young companies that want to focus on their core business and not have to spend money on expensive hardware.

Amazon Web Services target start-ups.

(Credit: Amazon)

Five years after it launched its first service, the company is making a name for itself in the utility computing space and attracting customers like Web pioneer The Internet Archive and newby Justin.tv. "Amazon Web Services has saved us a lot of money," Kyle Vogt, vice president of engineering at the start-up said at an Amazon event this week aimed at explaining the services to start-ups.

Other customers concurred, some saying they were able to skip venture capital funding because they didn't have infrastructure capital expenditures. But several, including execs at The Internet Archive and Mashery, an API management provider, said the fact that Amazon doesn't offer a service level agreement raises some eyebrows. Amazon's track record on its own services was good enough for them, they said.

Is this just an experiment for the Web retailer? No, says Adam Selipsky, vice president of Amazon Web Services. "We're a technology company, and we're going to expand on this technology base to other markets," he said. "We're definitely in this business to stay."

Amazon wants to help entrepreneurs realize their dreams--and become Web services customers--and is launching a Start-Up Challenge contest for the best new Internet company idea. The winner will get $50,000 cash, the same amount in Amazon Web Services credits, mentoring and a "seed investment offer," Selipsky says.

An Amazon spokeswoman wouldn't tell me what impact the Web services business has had on the company's financials. "We remain in the early days of this business, but we're already pleasantly surprised by the growth we're seeing," she says.