Amazon.com’s Amazon Web Services business, facing looming competition for its business of renting online data storage and computing, is introducing a store where customers will be able to rent business software from a number of third-party providers, including I.B.M., Microsoft and SAP.
The store, called AWS Marketplace, will use the Amazon Web Services billing and fulfillment system. Payments will be based on use, either by the hour or the month. At opening, the store has databases, software developer tools and business applications. The marketplace also has several free open source offerings, such as Drupal, an online content management system, and WordPress, used for online publishing.
The offering appears to be something of a blend of the software as a service, or SaaS, business of companies like Salesforce.com and NetSuite, and the mobile app stores popularized by Apple and Google. Like SaaS, customers are renting their software, and can easily discontinue use in favor of another vendor, something much more difficult using traditional packaged software. And like an app store, the AWS Marketplace has several vendors, plus a means of discovery and comparison among products.
Unlike mobile app stores, it is unlikely that the AWS Marketplace will ever have thousands of product offerings, or that vendors will easily be able to develop products for Amazon. As the steward of these business applications, as well as company data, Amazon is likely to maintain relatively high levels of quality and security.
Strategically, Amazon is potentially raising the barrier to competition. Recently companies including Hewlett-Packard, Dell, and I.B.M., among others, have pledged money and talent to developing an open source alternative to Amazon Web Services. These companies, which joined Rackspace, a cloud computing provider, hope to offer computing clouds similar to Amazon’s service, plus their own software. If the AWS Marketplace is successful, Amazon will boast a greater range of software choices. The presence of I.B.M. in Amazon’s service indicates that some companies are already hedging their bets.