Amazon dangles seed money for Web services start-ups

Amazon Web Services is launching a program to entice start-up developers with money to build applications that use Amazon's utility computing services. A small company could even get seed money out of the deal.

A subsidiary of online retail giant Amazon.com, Amazon Web Services is a suite of services that let developers access hosted computing, storage, payment and other services and pay for them on a per-usage basis.

Company executives, including CEO Jeff Bezos, have singled out its Web services business as a potential area of future revenue growth and a way to expand into new customers.

The first prize winner will get $50,000 in cash, $50,000 in Amazon Web Services credits and an investment offer from Amazon.com. Four second place winners get $5,000 in credits.

The investment offer for the contest winner, which has to be U.S. company with less than $10 million in annual revenue, will be aimed at getting that company started rather than an outright acquisition, said Adam Selipsky, vice president of product development and developer relations at Amazon Web Services.

"This is about helping and spotlighting new ideas, not about an acquisition strategy," Selipski said.

By encouraging outside companies to build applications with Amazon Web services, the company hopes to expand its nascent business and grow the ecosystem of third-party tools--a strategy used by traditional developer tool companies.

For example, Adobe Systems, which makes the Flash and AIR developer platforms, has set up a venture fund specifically to invest in small companies that use Adobe technology.

Entries for Amazon's start-up challengeare due by October 28.