The Risk of Amazon Moving from Core Business Essay

While Amazon. com is diversifying its business model, which could contribute to the company’s success, there are several logistical problems that need to be overcome. By offering computing power and data storage, Amazon. com could be setting itself up for failure. With the ever-growing popularity of cloud computing and storage, consumers are looking for the least expensive place to house their information. Amazon. com is currently offering storage as low as $0. 055 per gigabyte with its new tiered pricing structure (Amazon. com, n. d. ).

The more storage that an individual or company uses with Amazon. om, the lower rate per GB. In a way, Amazon. com is actually encouraging more storage. As more data is stored on Amazon. com’s servers, the more servers will need to be added to the server farms to keep up with customer demand. Amazon. com is not only storing information for third parties, but is also storing their own customer information. With Amazon. com’s Elastic Compute Cloud (EC2), people who need a much higher level of processing power than available to them through conventional computers can utilize the processing power of Amazon. com’s server farms.

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Customers pay as little as $0. 02 per hour, which is significantly less than the cost of purchasing or leasing a computer system capable of the same level of computing power. As this pay per use model gains popularity, Amazon. com will either have to increase its rates to drive down customer demand or expand their server farms to accommodate the increase in demand. Another potential obstacle for Amazon. com is securing their clients’ data. By storing their clients’ data, they become a target for hacking and information theft.

In 2008, Countrywide Financial Corp. ad customer information stolen from its database by an employee (Reckard, 2008). Data breaches such as these take place every year. With the number of customers that have accessed Amazon. com, the potential for loss is immense. “Knowledge is information that is contextual, relevant, and actionable. Simply put, knowledge is information in action” (Rainer & Turban, 2008, p. 123). Amazon. com collects massive amounts of raw data, which it compiles into usable information. It uses this information to make shopping suggestions to its customers. This information is also used to speed up transaction times for purchases. The raw data is input by the customer. Amazon. com compiles the data and makes it into usable information and then uses the knowledge gained from the information to better serve its customers.

References

Amazon. com. (n. d. ). Amazon Simple Storage Service (Amazon S3). Retrieved from http://aws. amazon. com/s3/ Rainer, R. K. , & Turban, E. (2008). Introduction to information systems (2nd ed. ). Hoboken, NJ: John Wiley & Sons. Reckard, E. S. (2008, September 10). Lender responds to data breach. Retrieved from http://articles. latimes. com/2008/sep/10/business/fi-countrywide10