Cloud Computing Is a High-Growth Market

All that potential isn't just for Amazon

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Amazon’s (AMZN) Amazon Web Services was in the news last week when the services had a bit of a hiccup (again). This time, the outage took down Instagram, Vine and Flipboard for an hour or so.

Another outage the week before knocked Amazon’s own front page offline, costing the company an estimated $5 million for the 45 minutes it was dark. Last year, AWS outages hit Netflix (NFLX), Pinterest, Quora, FourSquare, Reddit and FaceBook’s (FB) Instagram. The importance of the news isn’t necessarily that AWS had a minor technical issue, it’s that fact that cloud computing is becoming central to so many companies.

Many of the names listed above are among the most talked about “it” companies in the high-tech space — rising stars, subject of IPO speculation and some established services that are dominating their respective markets.

The takeaway from this is that cloud computing has had a tremendous effect on companies’ ability to go from simple idea to viable (or at least popular) web-based businesses. One of the biggest expenses for these startups used to be their data centers — investing in all that equipment, the trained IT staff to run and maintain it plus the secure premises to house it all was expensive. If their service proved popular, expansion was costly, time-consuming, disruptive and usually required bringing on more IT staff.

By offloading the capital investment, rent and the majority of the IT staffing to a cloud computing provider, web-based startups need far less staff (and cash) to go from an idea to a service boasting millions of users. As users pile on, the company simply ups its monthly payment to instantly add more capacity. Security, redundancy and uptime is the problem of the cloud data center.

FourSquare, with more than 30 million users, 1 million merchant users and 3 billion check-ins only has a little more than 100 employees. Pinterest, with more than 70 million users, has somewhere around 150 staff. Without options like AWS, it’s doubtful that many of these companies would be able to get off the ground, let alone grow at the rate they have.


Article printed from InvestorPlace Media, http://investorplace.com/2013/08/cloud-computing-is-a-high-growth-market/.

©2014 InvestorPlace Media, LLC

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