Press Room

MarketPlace Radio: Competition heads for the cloud

July 2nd, 2012

Queena Kim   

Listen to the radio story:

Tess Vigeland: So I went to post on Instagram Friday night -- a photo of the beautiful Pasadena city hall building at night -- and I got this error message. So did everybody else who uses Instagram, Netflix or Pinterest.

What mayhem was this? A storm. Which, by the way, caused all kinds of untold actual damage, as well as the horror of not being able to post pictures of what you're eating.

But what happened was the storm brought down Amazon's cloud computing service, which is actually a sea of servers where businesses house their computing operations. It may also have sparked a new round of competition in one of technology's fastest growing businesses. Marketplace's Queena Kim reports.

Queena Kim: Amazon is one of the biggest and oldest players in the cloud. It's been there since way back in 2006. But the industry is getting crowded.

David Kurnos: Equnoix, Rack, private companies now. It's a very large landscape.

Daniel Kurnos is an analyst at Benchmark Capital. He doesn't think the outage will hurt Amazon, but competitors didn't waste any time capitalizing on it. Joyent cloud web service in Northern Virginia held on the during the storm.

Kurnos: They were first to come out and say, "Hey, we didn't have any problems."

Renting out server space in the cloud is worth about $3 billion a year, according to Forrester Research. Amazon is estimated to have a third of the market now and rent to everyone from biggies like Fox Entertainment and Unilever to startups. But now giants like Google are getting in. It said last week that it’s starting a cloud service.

What happened during the storm isn’t the first big outage for Amazon. Lydia Leong is an analyst with Gartner. She says that while customers have been patient with the emerging industry and its missteps, that might change.

Lydia Leong: Things like 'our generators didn't kick in when we expected them to,' that isn't considered to be an acceptable problem, right? That becomes the, 'you should understand how to do this and be doing it well already.'

What they may need to understand first is whether the cloud was just a victim of Mother Nature, or also has man-made technical problems.