Amazon web services - Case Study Example

Amazon Web Services Key Value-Adds For Business s Amazon relied on reliability, scalability and low price so far as AWS was concerned. These features did not differentiate the services of Amazon; however these were a must for the long term success of the AWS division. All the AWS’s services were easy to use and they provided instant capacity to businesses. This, in turn, helped businesses to get to the markets faster. Unlike competitors that charged an upfront fee and subscription fee, AWS adopted the pay-per-use pricing that helped its customers to save substantial costs.

Pros and Cons of Pay-Per-Use Pricing Amazon’s pay-per-use pricing for AWS was an aggressive pricing strategy. The biggest benefit of this strategy was its potency to attract a large number of customers and thus build a huge customer base for the company. Amazon believed that by building scale, it could lower the bandwidth and hardware costs in the long run. The demerit of this pricing model was that it did not guarantee a certain amount of revenue from any customer. Some of the AWS customers paid less than $1 to the company.

Evaluation/ Recommendations The AWS services have been pretty successful and hold a lot of promise for the future. On the face of it, AWS appears to be a diversion from Amazon’s core business; however in reality this is not the case. Since inception, Amazon has invested heavily in technology and its core competencies lie in the back end operations. To that extent, AWS is a perfect fit for Amazon’s skill sets. Since AWS was a front runner in the ‘cloud’ services, Amazon derived the first-mover advantage as well.

It is recommended that Amazon broadens the customer base for the AWS services. Till date the company has been primarily relying on developers. It needs to rope in corporate customers given the fact that other technology behemoths like Microsoft and IBM are developing similar technologies.