Amazon Web Services Could Have Big Impact on Traditional Hosting: Report

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Following a number of high-profile hosting deals, Amazon Web Services (aws.amazon.com) could be well on its way to successfully tapping into the traditional Web hosting market, according to a top technology blog.

After talking with AWS product management and developer relations vice president Adam Selipsky, influential blogger Om Malik wrote that Amazon may be “suddenly (and perhaps unintentionally) find[ing] itself competing with thousands of Web hosts.”

Founder of the GigaOM Network, where he is currently a senior writer, Malik notes that AWS could very well threaten major web hosts such as RackSpace (www.rackspace.com) and The Planet (www.theplanet.com), which is in the process of merging with Web host SoftLayer (www.softlayer.com).

Selipsky told Malik that AWS in being used by Newsweek and PBS’s network to host their websites. And e-consulting firms such as Digitaria and Razorfish are adding a thousands of sites a year to Amazon.

AWS clearly competes with companies offering dedicated servers, virtual private servers, and other cloud computing platforms, and as such it requires special expertise for organizations to effectively use these services. In its current state, AWS alone is too complex for most small businesses, which simply want to create a site.

The adoption of AWS, Malik notes, is dependent on its relationships with the e-consulting firms that attract corporate clients and create solutions tailored to them. Again, while this may make AWS appealing to larger companies, it limits Amazon’s impact on the hosting services market for smaller businesses, especially those that cannot afford consulting or prefer to take a DIY approach to their Web services.

In a previous post, Malik examined some of the projected revenues of AWS. UBS Investment Research anticipates revenue to be about $500 million by the end of 2010, and to grow to $750 million by 2011, then to approximately $2.54 billion by 2014. This growth appears to be driven by growth in the global cloud market, and in the total servers and storage market.

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