Will Amazon Offer Analytics as a Service?

Grazed from New York Times.  Author: Quentin Hardy.

Amazon.com, through its Web services business, stores vast amounts of data for companies worldwide. Does it want to start analyzing it too?

Specialists in data science say the company has become increasingly interested in the business models of firms that make and sell pattern-finding algorithms for extremely large data sets. They theorize that Amazon wants to move beyond its cloud services businesses — which rents data storage and raw computing power — and add to these offerings analysis software that can be rented, and possibly modified, to suit a company’s needs.

“Amazon has the expertise and the computing power to do something like this,” says Kyle McNabb, a vice president at research firm Forrester. “They could rent an analytics engine to people on a quarterly basis, possibly offer to match your data to other large data sets and find something useful.”…

A spokesman for Amazon had no comment on its plans, which he termed “rumor and speculation.”

It would not be difficult for Amazon to offer such a service, since many of the company’s major products are already on Amazon Web Services, and other legacy applications are being moved there. That means that data management tools like Map Reduce (currently a feature in Amazon Web Services), payment security and fraud detection software, and Amazon’s product recommendation engine could all be in the system.

While prices are dropping for the predictive and analytic software offered by the likes of SAS and EMC, the products are generally considered somewhat expensive. Amazon could remove the higher-value proprietary features from its software and sell a cheap simplified version, in the way Google created its Google Analytics Web site service in order to increase the attractiveness of its advertising-based business.

“They are particularly interested in fraud detection and product recommendation, which are proven valuable things,” says the chief executive of an analytics software company who requested anonymity because of his ongoing business discussions with Amazon. “They’re very interested in how they can grow this.”

Amazon Web Services has so far concentrated mostly on offering the raw materials of storage and computing to engineering teams, the so-called “back end” of computing. A move to typically higher-value “front end” products for people in areas like finance or marketing is likely, both for Amazon and others in the cloud computing business. Amazon has already gone from selling books to offering services whereby authors can publish their works directly on e-readers, operating Web sites for other companies, and purchased outfits like the Zappos shoe retailer to sell a broader array of goods.

Given the large amounts of data, and the few people qualified to make sense of it, “someone will offer this as a service, maybe a lot of companies” said Mr. McNabb of Forrester. “Oracle has the assets to do it, but I’m not sure they are interested. I.B.M. has the assets, and Apple could if they wanted to, with their understanding of customer behavior. Amazon is a very good candidate to make it work.”