blogs.wsj.com
July 28, 2013, 9:54 PM ET
Netflix Brings Amazon Web Services Closer
Rachael King
Reporter
Count Netflix Inc. among those who don’t seem fazed by Amazon.com Inc.’s loss in Q2, which caught most analysts by surprise. In fact, the loss reflects to some extent Amazon’s increased spending on the very cloud infrastructure upon which Netflix, and countless other customers, depend for their business. Indeed, Netflix is so dependent on Amazon Web Services that it is using prize money to court open source developers to create management tools for AWS.
But while Amazon is Netflix’s vendor, the two companies also compete fiercely in the on-demand video market. This makes it all the more astonishing that Netflix is working to support Amazon. But while courting open source developers to build tools for AWS will bolster Amazon’s cloud business in the short term, the strategy could lead to a broader ecosystem in cloud services that could ultimately help Amazon’s competitors as well, giving Netflix other options as the cloud services market matures.
Netflix says it is one of Amazon Web Services’ largest customers. Almost all of Netflix’s information technology services run on AWS, from the software that runs its internal operations to everything customers see on the TV screen when they scroll through and select videos. (The only part that doesn’t run on Amazon is the physical online delivery of the videos through Internet service providers.) Netflix in March unveiled the Netflix Cloud Prize in order to spur development of open source software that runs on top of AWS. The contest, with $100,000 in prizes, runs from March through September. Netflix will give each of ten grand prize winners $10,000 in cash, $5,000 in credits toward future use of certain eligible AWS services and a trip to Las Vegas for two to attend the annual AWS re:Invent conference in November. Netflix plans to hand out trophies to winners at the conference.
The company says it is comfortable with the paradoxical nature of its relationship with Amazon. “In this day and age, you’ll find that most big and important high tech companies manage to compete and collaborate at the same time,” Yury Izrailevsky, vice president of cloud computing and platform engineering at Netflix, told CIO Journal during a phone interview. |
