The Virtual Is Real – Just Ask Amazon!

This is NOT about Amazon’s presence in Second Life but rather how and why their Hardware as a Service(HaaS) strategy is part of the evolving meshverse economy. In the spirit of previous posts about Cisco and Intel, I was going to call it Amazon The Hardware Company, but … well, y’all know I just couldn’t resist :-). In any case, here’s a taste of what I consider required reading for anyone seeking to understand the economic evolution of the internet:

In early 2000, Google enabled web publishers to generate revenue from their content. Google introduced a fair pricing model that worked for everyone, from personal publishers to big media companies. As a consequence, some earned pennies with Google AdSense, while others earned millions of dollars per month.

In other words, Google fragmentized the Revenue side of web business and made it available to everyone. But the Costs side of the web business remained the same for a very long time. There was an ongoing inefficiency and nobody did much about it. Virtualization, which was made commercially available first by VMware, changed things a little and lowered the prices of hardware. But things were still pretty much the same; publishers still had to pay for resources they didn’t use and deal with the hassles of maintenance.

Now what Amazon is doing with EC2 and S3 is to fragmentize the Costs part of Web business. Publishesr no longer need to deal with scalability – they pay exactly for what they use. In other words, resources are allocated more efficiently than ever – which was what happened with Google AdSense too, as the below diagram shows.

ReadWriteWeb: Why Amazon’s HaaS(Hardware as a Service) Strategy is a Winner

In last year’s Riding The River Rapids In A Mesh Jungle I presented this strategy in the context of how it fit into the $64 Billon Dollar question at the heart of the emerging meshverse. Now, ReadWrite Web breaks down the some of numbers for you – they’re critical to understanding the coming boom in virtual property.


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