Business Tech

Amazon on Monday rolled out spot pricing for cloud computing so customers can buy capacity at any price on the open market.

The concept is an interesting one since Amazon Web Services is making computing capacity available on the market just like any other commodity (see Amazon statement, Werner Vogels, and Amazon Web Services blog).

Dubbed Spot Instances, Amazon customers can bid on unused Elastic Compute Cloud (EC2) capacity and run those instances as long as their bid exceeds the spot price. The rub is that you can be outbid.

Read more of "Amazon creates cloud computing spot market at ZDNet's Between the Lines.

IBM is continuing its investment in cloud computing with a new lab in Hong Kong, expanding the presence of its IBM China Development Laboratory (CDL), the company's largest with more than 5,000 developers on staff.

The laboratory builds on the e-mail technology of Outblaze Limited, a Hong Kong-based company whose messaging assets were acquired by IBM earlier this year and incorporated into the Lotus brand. The new lab claims to be the first of its kind in Hong Kong and shows both the importance of global development teams and IBM's focus on growth in emerging markets, a user segment that is theoretically more adaptable to different methods of application consumption and likely well-acquainted with browser-based applications.

Overall, the fourth quarter of 2009 has seen several interesting cloud-related announcements from IBM, including the LotusLive service that launched in October and already claims more than 18 million active users. Big Blue also launched the Cloud Academy program designed to help educators and students pursue cloud-computing initiatives and better take advantage of collaboration technology in their studies.

IBM has taken a leading role in the development and adoption of cloud services while other large vendors such as SAP, HP, Oracle, Sun and Microsoft have all made cloud-oriented announcements with few proof points that their efforts will be successful. There is no certainty that IBM will be successful either, but the company has at least made consistent progress in both technology and user adoption.

IBM representatives told me that the company will continue to focus on delivering "the most reliable and secure cloud services" architected to meet the needs of consumers as well as their mainstay enterprise buying audience. Totally logical, and still surprising that the other big vendors haven't figured out how to attract their core user base to cloud platforms and services.

The cloud remains a bit of an anomaly in the tech world, dominated by Amazon, an e-commerce site, while stalwart IT vendors like Microsoft continue to take baby steps toward mainstreaming their efforts.

My blogging colleague, James Urquhart, wrote this week about Microsoft's new business unit that merges its cloud and on-premise server group into one development team, which makes sense, at least in theory.

Practically speaking, Microsoft is way behind the curve and has a lot of ground to make. I've written in the past that the opportunity is theirs to lose, and it's hard to see how they plan to win, even with this new structure.

The European Commission must be feeling a bit silly right about now. Despite insisting that Oracle has not responded to its requests for comment and concessions in its planned acquisition of Sun Microsystems (and the open-source database MySQL), Amazon.com recently offered the EC all the proof it needs that MySQL competition remains alive and well.

For those who missed it, Amazon announced last week a fork of the popular MySQL database, called RDS (Relational Database Service). RDS is essentially a hosted version of MySQL, one that developers can write to at the minuscule cost of pennies per hour.

Oracle hasn't even started with MySQL yet, and it already faces significant competition, not to mention the other MySQL forks (e.g., Drizzle).

As Redmonk analyst Stephen O'Grady writes:

From here, it seems fairly clear that while RDS will not be the best option for every MySQL user, it will find a more than adequate market of customers who are willing to trade money for time, as (former MySQL CEO) Marten Mickos might put it. Assuming that Amazon can realize its typical economies of scale by amortizing the management and administration costs of the service over a wide array of machines, the product should more than pay for itself simply by widening the addressable market.

How much wider will it make the addressable market? At a minimum, it will lower the barriers to entry for customers with relational needs (read: most customers) and a lack of cloud expertise. It will be fascinating to see, however, if Amazon has far grander ambitions in mind.

Interesting, and somewhat unfair to Oracle. Presumably Amazon's entrance into the MySQL market is A-OK because Amazon isn't currently a database company, but it is a significant and growing infrastructure provider. Why should it get to own a complete stack, but Oracle can't?

That, after all, is what Oracle is attempting to accomplish with the Sun/MySQL acquisition. Sun gives it hardware, while MySQL gives it a strong entry into the Web database market and an effective hedge against Microsoft in lower-end enterprise needs.

Oracle's bid for Sun/MySQL, in other words, isn't about squelching competition, but rather about enhancing it. Amazon's RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC's argument that Oracle's control of MySQL will somehow crush competition.

And if the deal doesn't hurt competition, as Amazon RDS all-but-proves it doesn't, then the EC's opposition is hollow and should be shelved, as The 451 Group's Matt Aslett argues.

It's time for the EC to acknowledge it was wrong, and move on. Amazon surely has. But until the EC makes a final decision, Oracle (and MySQL) can't.

A simple phrase and pin code may be all you need the next time you pay for that book or CD at Amazon.

The online retailer on Thursday debuted a new feature called Amazon PayPhrase, designed to let busy shoppers store their name, address, and payment information in a single phrase and pin code. Instead of entering all that data at the online checkout counter, you type your phrase and pin number when it's time to cough up the cash.

PayPhrase doesn't just work at Amazon--it can be used at any online retailer that lets you pay via Amazon Payments. That covers a range of cyberstores, including Buy.com, J&R Electronics, DKNY, and Car Toys.

PayPhrase also omits the need for a user name and password to store your personal info on every shopping site that uses Amazon Payments. However, you will need an Amazon.com account to set up and maintain your phrase.

Amazon sees PayPhrase as a benefit to consumers trying to juggle different accounts at different retail sites.

"PayPhrase solves the headache of trying to keep track of all the different user names and passwords people use to shop on various sites across the Web," said Matt Williams, general manager of Amazon PayPhrase, in a statement. "With PayPhrase all you need is one phrase and one PIN to pay online."

Here's how the process works:

1. You first set up your PayPhrase. The phrase can be two or more words, and the entire phrase must be at least four characters but no more than 100. Amazon provides a list of suggested phrases, or you can create your own. (With Amazon's suggested phrases of "Unusually Obese," "Contraceptive Cream," and "Bush's Education Department," you might want to create your own.) Since everyone's PayPhrase must be unique, Amazon will tell you whether or not your phrase is taken.
2. You set up your four-digit pin number.
3. You enter your Amazon.com user name and password.
4. You either confirm or enter your mailing address and credit card information.
5. After your PayPhrase is set up, you'll receive an e-mail from Amazon confirming the details.
6. The next time you check out to buy an item on Amazon or an Amazon Payment retailer, a field for PayPhrase Express Checkout will appear. You enter your phrase. You then review your order details and total cost and finally enter your pin number to submit the purchase.

Of course, a feature like this always shouts out one question: Is it secure? Amazon naturally believes so.

Though Amazon stores your credit card information, the company points out that your payment information is not shared with other online retailers. And to modify your PayPhrase settings, you have to log in to the PayPhrase site with your Amazon.com username and password.

You can establish monthly cash limits on your account ranging from $10 to $500. Finally, you can opt to receive an approval request by e-mail or cell phone for all orders that are placed.

Check out Amazon's promo video page for a brief tour of PayPhrase.

Expanding its cloud-computing storage services to a higher level, Amazon.com unveiled a new option called Amazon RDS for companies that want to store information in a database on the other side of the Internet.

The suite of Amazon Web Services (AWS) already included a database option called SimpleDB, a basic database with its own interface standard for storing data and retrieving it. The Amazon Relational Database Service, in contrast, uses a more standard database interface, embodied in this case in an online implementation of the open-source MySQL software, the company said Monday.

"With Amazon RDS, you get full native access to a MySQL database," specifically, version 5.1 of the Sun Microsystems technology, the company said on its Amazon RDS site. "This means Amazon RDS works with your existing tools, applications, and drivers. You can port an existing database to Amazon RDS without changing a line of code--just point your tools or applications at your Amazon RDS DB instance, and you are ready to go."

Amazon raised minimized hassle and increased flexibility as reasons to use the service, which is currently in beta testing.

"Every hour that you don't spend fiddling with hardware, tracing cables, installing operating systems, or managing databases is an hour that you can spend on the unique and value-added aspects of your application," Jeff Barr, the company's Web services evangelist, said in a blog post. "I should point out that RDS enables a lot of really enticing development and test scenarios. You can set up a separate database instance for each developer on a project without making a big investment in hardware."

With its years-long effort, the Net retailer has built Amazon Web Services into a formidable presence in the information technology world. Competitors include Google App Engine, a computing foundation that can run Java or Python programs on Google's own BigTable database technology, and Microsoft's Azure, which is set to offer access to Windows servers in the cloud when it formally launches in November.

One potentially interesting rival is Oracle, already a giant in the database market and, if it can overcome European regulatory concerns, the future owner of MySQL assets. Because MySQL is open-source software, though, anyone may use and modify it, even without its copyright holders' permission.

The biggest competitor to this model is doing things the old way, with companies running their own computing infrastructure. Cloud computing poses security and trust issues for many companies considering whether to put their data and business applications on somebody else's computer systems. But researchers such as Gartner, an influential but not radical analyst firm, now recommend that companies look seriously at cloud computing.

Amazon is working on greater robustness for Amazon RDS. It offers automated backup, and it later plans to offer a "high-availability" option at no extra charge, with which customers can create a separate instance of a database in a different geographic region.

As with all services on AWS, Amazon RDS is priced on an as-used basis--with per-hour charges according to the server memory requirements of the database: 11 cents per hour for a small database of 1.7GB of RAM; 44 cents for large, or 7.5GB; 88 cents for extra-large, or 15GB; $1.55 for double extra-large, or 34GB; and $3.10 for quadruple extra-large, or 68GB. There also are charges for the size of data stored, the number of input-output requests, the amount of data written to the database, and the amount of data read from the database.

You wouldn't know there's been a slowdown in consumer spending by looking at Amazon.com and Netflix.

Both companies have continued to grab customers at a record pace, leading to higher earnings and sales for their third quarters.

Net income for Amazon jumped 68 percent to $199 million, or 45 cents a share, in the quarter that ended September 30, compared with $118 million, or 27 cents a share, in the prior year's quarter.

Sales rose 28 percent to $5.45 billion versus $4.26 billion in 2008's third quarter, the company said Thursday.

Amazon's stock shot up $23.75, or 25 percent, to $117.29 in Friday trading.

Amazon attributed its earnings to several key factors.

Chief Financial Officer Tom Szkutak said Thursday in a conference call with reporters that consumers continue to spend at Amazon because of its low prices and large selection. The company noted that it had 98 million customer accounts by the end of the third quarter, 17 percent higher than a year ago.

Worldwide sales from books, CDs, DVDs, and other media grew 17 percent to $2.93 billion, while revenue for electronics and other general merchandise soared 44 percent to $2.36 billion.

Another solid driver for growth was the Amazon e-book reader, Kindle.

"Kindle has become the No. 1 bestselling item by both unit sales and dollars--not just in our electronics store but across all product categories on Amazon.com," Amazon CEO Jeff Bezos said in a statement. The company did not release specific sales figures for the Kindle.

Amazon managed to clobber analysts' expectations. J.P. Morgan had forecast earnings per share of 31 cents on sales of $5 billion. Broadpoint.Gleacher analyst Ben Schachter had been eyeing earnings per share of 33 cents and said that sales were 7 percent higher than he expected.

In a report, J.P. Morgan said Amazon's strong sales growth shows that the company is grabbing significant market share from other e-commerce players, such as eBay.

In his report, Schachter called the results "phenomenal." He noted that Amazon was able to keep its costs in check while gaining market share in virtually every product category. The analyst also said he was "shocked" to hear Bezos' statement that the Kindle has become the company's top-selling item.

For the current quarter, Amazon is looking for sales of $8.13 billion to $9.13 billion, 21 to 36 percent higher than last year's fourth quarter, and racing past analysts' estimates of $8.11 billion.

Collins Stewart analyst Sandeep Aggarwal said in a report that improving e-commerce trends and continued growth for the Kindle, among other factors, could make Amazon the fastest growing large-cap Internet stock.

Another beneficiary of solid customer growth, Netflix also surpassed analysts' expectations for the third quarter.

The company's earnings jumped 48 percent to $30.1 million, or 52 cents a share, versus $20.4 million, or 33 cents a share in the prior year's quarter. Sales grew 24 percent to $423.1 million, compared with $341.3 million in 2008's third quarter.

Overall, analysts had been expecting earnings of 46 cents per share on sales of $420 million.

Growth in subscribers was the key driver for Netflix in the third quarter. The company ended the quarter with around 11.11 million subscribers, a 28 percent jump from the 8.67 million subscribers at the end of 2008's third quarter. Of the current total, 98 percent, or 10.84 million, were paid subscribers, while the remaining 2 percent were free subscribers.

"Our business momentum is strong and our third quarter performance keeps us solidly on course for a record 2009," Netflix co-founder and Chief Executive Officer Reed Hastings, said in a statement.

Though most Netflix customers still prefer to get their movies by conventional mail, Internet streaming has gradually taken off. In the third quarter, 42 percent of Netflix subscribers streamed at least 15 minutes of video, compared with only 22 percent in the prior year's quarter.

Customers can stream their Netflix picks not just through the PC but via gadgets like Microsoft's Xbox 360, which has helped attract new customers.

Now Netflix has reportedly struck a deal to add streaming to another device, which Hastings said is already in people's homes. Though the company has been mum about details, analysts believe it may be a video game console made by either Sony or Nintendo.

Netflix shares were up $4.58, or 9 percent, to $54.22 on Friday.

For the fourth quarter, the company believes customer growth and sales will be higher than anticipated three months ago. Netflix now expects to end the current quarter with 12 million to 12.3 million subscribers, up from the prior estimate of 11.6 million to 12 million. That would represent an additional 900,000 to 1.2 million customers.

Fourth-quarter sales are likely to reach $440 million to $446 million, up from the previous estimate of $431 million to $445 million.

However, the company forecasts a downturn in earnings from the third quarter, eyeing fourth-quarter net income of $21 million to $26 million, or 38 cents to 47 cents a share.

Expenses may be one factor affecting current earnings. Hastings said the company expects to spend more on marketing and licensing fees for Internet streaming. Netflix also believes its postal costs will continue to grow, surpassing $600 million next year and $700 million in 2011.

Two years after Google announced Android, phone manufacturers are launching devices with the mobile operating system, and carriers are lining up to sell them.

In the past couple of months, nine devices using Google's mobile operating system have been announced. The pipeline is full of more Android devices, some that are confirmed and some that are still rumored to be in development.

U.S. wireless operators are also jumping on the Google Android bandwagon. Up to now, T-Mobile USA, the smallest of the four nationwide carriers, had been the only U.S. wireless operator to offer Android devices. But T-Mobile won't be alone for much longer. Starting next week, Sprint Nextel will introduce the HTC Hero, its first Android phone. Verizon Wireless will get two Google Android phones in the coming weeks. Even AT&T is expected to have a Google Android phone soon.

More headlines

Adobe pushes Flash video on mobile devices

Adobe garners the support of Google, Palm, and Motorola for its new Flash software for smartphones, smartbooks, Netbooks, and other mobile devices.
•  Adobe tries keeping Flash in Web vanguard
•  Adobe Flash apps come to iPhone--sort of
•  Adobe spells out iPhone apps limitations

AT&T to allow VoIP iPhone apps on 3G network

AT&T and Apple clear the way for iPhone users to begin using VoIP apps on its wireless network.
•  Vonage app available for iPhone, BlackBerry
•  Telus, Bell to get the iPhone in Canada

Microsoft introduces 'Starter' version of Office

Ad-supported, limited-feature version of Office will come preloaded on certain new PCs to take the place of Microsoft Works.

Google: Computer memory flakier than expected

After studying most of its servers for more than two years, Google finds that computer memory failures are much more common than expected and debunks some other myths.

Amazon goes global with new Kindle

The new edition of the e-book reader that can wirelessly download books in more than 100 countries. Also: a price cut for U.S. consumers.
•  B&N e-book reader reportedly in the works

Did Viacom find smoking gun in YouTube case?

YouTube's internal e-mails indicate employees and managers knew about copyright content, sources say, but chose to leave the material on the site. What are the DMCA ramifications?
•  Schmidt: We paid $1 billion premium for YouTube

IBM Research jumps into genetic sequencing

Big Blue hopes its electronic automation technology will give people and their doctors individual genetic records for less than $1,000.

FTC to bloggers: Fess up or pay up

A fine of up to $11,000 awaits bloggers who don't reveal paid reviews or free products, in the first revision to the FTC's disclosure guidelines in three decades.
•  Yes, new FTC guidelines extend to Facebook fan pages

Facebook's mounting customer service crisis

It's unclear how many members still can't access their accounts after Facebook acknowledged a database issue, but one thing's for sure: the ones locked out are steaming mad.
•  Something is clogging the Twitter stream!

At Ceatec 2009, a starring role for 3D

The long-awaited 3D technology may finally be on its way to the living room--and it could also be headed to the operating room.
•  Full coverage of Ceatec

Also of note

•  Phished or not, leaked passwords show lazy habits
•  RealNetworks set to file appeal in RealDVD case
•  Lego devotees flock to Seattle

If recent research is any indication, Amazon.com and Google are winning the cloud game.

Evans Data on Tuesday released a report (registration required) on how developers perceive cloud service providers related to cloud services offerings, including their completeness and the companies' ability to execute on the vision.

Janel Garvin, the founder of Evans Data and the author of the report, provides excellent insight into the current state of the market and how quickly things could change, if certain large vendors (notably AT&T and Microsoft) got their acts together more quickly.

Given their robust services, it isn't surprising that Amazon and Google top the list. And although IBM, VMware, and Microsoft trail, each offers important components of cloud infrastructure.

... Read more

Amazon Payments today launched a new service that brings the company's payment processing tools to mobile devices. Amazon Mobile Payments Service (MPS) includes a set of APIs (application programming interfaces) that allow mobile developers and merchants to provide payment options to their customers within mobile Web sites and applications--including the convenience of Amazon's 1-Click checkout system.

There are already a number of mobile payment providers, but Amazon is the big dog of the e-commerce world with an enormous amount of customer accounts already in use. This could be an excellent option for companies that offer mass-market mobile applications and are looking for ways to easily accept payments.

The service will automatically detect the request origin, meaning a Web or mobile browser, or a mobile application so that developers don't need to re-work their applications.

... Read more