Amazon has figured out another way to avoid making any profits: this time by giving away loads of its Amazon Web Services resources to startups, opening up another cash-hemorrhaging front in its ongoing cloud war with Microsoft.
The "AWS Activate" program was announced by Amazon on Thursday and sees Bezos & Co try to woo upstarts over to its cloud, and away from the giveaways promoted by Microsoft through its BizSpark program.
It's a money-versus-money battle between a profitable company with a large war chest (Microsoft), and an unprofitable company with a fizzy stock backed by patient investors (Amazon). Getting young companies, and by extension their data, hooked on a cloud is important for any cloud giant, as once that data is in the company's infrastructure it's likely to stay there.
The Amazon giveaway has two tiers: one for independent startups, and a more generous one for those backed by the filthy valley lucre of a few accelerators or funds.
Independent startups will get a month of AWS Support at the Developer Level, access to tech in AWS's free usage tier, credit for one self-paced AWS Technical Professional training lab, access to a dedicated startup forum, and special "self-starter" third-party offers. This isn't particularly generous, nor useful given the weedy resources available in the free tier, but should help novice businesses find their way up into the AWS cloud.
Where it gets interesting – and pricey for Amazon – is the "Portfolio Package" tier, which will give startups vetted by accelerators and funds between $1,000 and $15,000 in AWS Promotional Credits, between a month and a year of AWS Support at the Business Level, credits for four self-paced training labs, special offers, and access to the startup forum.
The third-party offers include giveaways such as free trials of technologies from Hosted Enterprise Chef, Alert Logic, Soasta, and others.
Some of the accelerators and funds Amazon is working with include Andreessen Horowitz, 500 Startups, Accel Partners, First Round Capital, and others.
"Startups have told us that they’d like support to help them iterate and build their companies," Amazon wrote in an FAQ about the program. "We developed AWS Activate to help deliver benefits in the common areas startups have requested support."
Amazon's giveaway seems to be a direct response to Microsoft's BizSpark scheme, which gives young companies a spread of free Azure cloud resources, including $200 of credit for the first month, then $150 general purpose credit thereafter for several months. Azure also makes its virtual machine available to startups at a 33 percent discount.
The giveaway is yet another example of how cloud is changing the way organizations buy and sell IT, and how giveaways are easier to achieve when the operator also controls the software and hardware on offer.
It also shines another light on the many ways in which Amazon mercilessly reinvests any potential corporate profits into its businesses, allowing it to pay little corporation tax and grow off the back of its dedicated investors that fluff its shares, despite its wafer-thin profit margin. ®
* Second-tier cloud provider Rackspace has its own giveaway program, but the $50 a month credit doesn't amount to much.