Bezos: Meet the 'other Amazon'

Bezos was speaking at the Technology Reviews Emerging Technologies Conference at the Massachusetts Institute of Technology here. He talked about Amazon Web services, a division of the online retailer that offers hosted computing services to third-party developers.

The company's two most recent Web services, which are accessible via application programming interfaces (APIs), are for hosted storage and hosted compute power.

Jeff Bezos

Although the program may seem unrelated to its retail business, Bezos said that Amazon Web Services is integral to the better-known e-commerce site.

"I get asked all the time, 'Why are you doing this? What does it have to do with selling books?'" Bezos said during a question session after his speech.

"It's not so much that (Amazon Web Services) has something to do with selling books. It's the inverse: Selling books has a lot to do with this," he said.

Bezos noted that running a public site at "Web scale" involves a great deal of technical expertise and cost, from running data centers. Amazon has invested more than $2 billion since its founding in building up its technical infrastructure, he noted.

Making those services available to outsiders via APIs is not much incremental cost for Amazon, and the company intends to make money on these services, which it bills on a per-usage basis.

"The reason we're doing this is because we think we can empower developers with a new kind of Web-scale technology. And we can make a profitable business for ourselves," Bezos said.

He cited examples of smaller companies using Amazon's hosted computing and storage services that radically changed their costs and computing requirements.

Photo-sharing site SmugMug, for example, uses Amazon's Simple Storage Service (S3), which allows the company to keep its staff small.

This outsourced computing model is being well-received by outside developers because it greatly decreases the need for up-front investment, he said.

"The dirty little secret is that at least 70 percent of the time, energy and dollars (of Web entrepreneurs) go into this back-end heavy lifting infrastructure," Bezos said. "You can transition from something that was a large fixed cost--from the lone developer to the venture-backed company--to be a variable cost."

Amazon intends to offer more Web services, but only for those technology tasks it does well.

"Our philosophy on this is that we want to open up everything we do well," Bezos said. "If we do something poorly, we will suffer quietly and internally and not expose those."