Amazon Case Study

1.

Amazon.com started out as an online bookstore which was founded in 1994, by name of Jeff Bezos. Amazon.com was known to be one of the largest online book stores, its profit growth was consistent but slower than what the investors has expected. Not long after other online websites started popping up, such as Google, Microsoft, and eBay causing the competition to grow and leaving Bezos no choice but to expand.

Although Amazon survived the dot com era they began to analyze their business strategy. By 2007 Amazon had spent twelve years and around $2 billion building the infrastructure of the largest most reliable online store in the world. (Rainer & Turner, 2008) As a result of heavy investment, Amazon has excess capacity, needing to capitalize on this excess capacity, so they decided to provide computing services available to companies and individuals. The three services are Simple Storage Services (S3), Elastic Compute Cloud (EC2) and Mechanical Turk. (Rainer & Turner, 2008)

The S3 is for the use of storage. Amazon charges 15 cents per gigabyte per month. EC2 is for processing power. Amazon charges 10 cents per hour. Webmail.Us and Powerset both use S3 and EC2. Amazon receives 10 percent commission for the Mechanical Turk service which processes power to transform the data into information. One of the biggest users for the Mechanical Turk is www.efrontier.com along Casting Words. They use this service to analyze tens of thousands search keywords to see who it attracts and uses what websites.

2.

I feel Amazon is moving in the right direction and with a very wise strategy. Amazon is smart using their excess resources to increase profit. With these resources the investors should be more acceptable to invest. Although Amazon is moving in the right direction, they will need to continue to improve and grow with the demands; if they want to keep