How Colocation Providers Can Follow Amazon’s Lead and Create Lucrative New IT Offerings

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In the data center industry we hear about Amazon Web Services (AWS) all the time, as the company is clearly one of the biggest players in the space and is, without question, an innovator in data center design and operation.

Today we take that at face value. And we’re talking about a company that started with a far more humble idea: selling books.

It’s worthwhile for colocation providers to consider how AWS evolved: from the IT infrastructure Amazon built up over time to sell books and, eventually, just about everything else. At some point, Amazon realized it is fundamentally an IT company and the expertise it developed over the years in how to build and operate data centers was a core competency. So much so that other people would pay to get a piece of it. And they do – in droves.

Colocation Providers

Amazon’s story is far from unique and has a long history in IT circles. An early example is SABRE, the reservation system developed by American Airlines in partnership with IBM. It was so successful that American eventually spun SABRE out to become its own company, selling reservation services to other airlines, hotels, car rental firms and the like. Later on, the Travelocity web site was spun out of SABRE (and eventually acquired).

Another more recent example involves Amazon’s founder, Jeff Bezos. In 2013, Bezos bought The Washington Post Co., including its flagship newspaper. Since then, he has been infusing the company with heavy doses of technology, including software that matches online ads to reader demographics and preferences, according to this story from NPR. The software is so good, the Post has sold it to 22 other publishers, NPR reports.

The point is, IT expertise is valuable – and colocation providers have significant IT expertise. It strikes me that providers have an opportunity to follow in the footsteps of the likes of Jeff Bezos and launch new lines of business that capitalize on that expertise.

I’d love to hear what you think. Are you ready to follow the example of Jeff Bezos and Amazon? What opportunities do you see for colocation providers? Please take our little poll to voice your opinion – and find out what others are thinking.

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