Strange bedfellows: Amazon sets up shop on Alibaba site

Amazon.com has opened an online presence on rival Alibaba’s Tmall superstore, according to Reuters and other outlets citing an Alibaba spokesman.

[company]Amazon[/company] and [company]Alibaba[/company] are both prodigious online retailers and rivals and both are eying the other’s turf. Earlier this week Aliyun, Alibaba’s online services arm, opened a cloud data center in Silicon Valley, its first presence in the U.S. Aliyun is seen as a competitor to cloud giant Amazon Web Services.

I’ve reached out to both Alibaba and Amazon for further comment and will update this story as needed.

Other western companies, including Costco, Burberry and Zara parent company Inditex, have also set up shop on Tmall, which runs the ecommerce sites and provides the associated payment-processing operations.

Amazon.com offers its own ecommerce site in China, but Alibaba is the 800-pound gorilla there and it makes sense for Amazon to set up shop on Alibaba’s Tmall if it wants to sell more stuff to Chinese citizens.  Long live co-opetition I guess.

For retailers the buy-or-build cloud decision looms large

If you need proof that cloud deployment stories can touch off religious disputes, my recent report about @Walmartlabs deploying 100K cores of OpenStack to run the retail giant’s e-commerce operations is Exhibit A.

This is, by any measure, a massive private cloud, and some readers were incredulous that [company]Walmart[/company] would go this route instead of plying public cloud services. It’s the old build versus buy discussion all over again, with many of the participants weighing in on the “buy” side.

One reader, termed this decision “ridiculous,” pointing out that @walmartlabs has hired on 1,000 or so engineers over the past year — although no one said all those people were dedicated to building or maintaining the aforementioned OpenStack private cloud. Still the argument is, if you go with public cloud, you won’t need to bring that much expensive talent in house. Engineering talent is pricey, especially in Silicon Valley. @walmartlabs is headquartered in San Bruno, Calif.

Wal-Mart StoreHis opinion is that a big retail outfit is far better off using “out of the box” public cloud capabilities for much of its work rather than reinventing the wheel (or building its own cloud.) For this camp, Walmart’s decision to build a customizable and flexible cloud with OpenStack makes no sense.

On the other hand, private cloud (and OpenStack) proponents noted joyously that Walmart’s work proves “private cloud deniers” wrong. (Does anyone else find that phrase disturbing? It brings to mind thought of climate change and holocaust deniers and seems to lack a sense of proportionality but back to the topic.)

Server Density CEO David Mytton, a buy sider, wrote about the Walmart private cloud here. Bottom line, he said Walmart is:

dedicating significant resources to building their own “private cloud” and although it’s true there is no specific vendor lock-in, they are locked into their own development. They’re competing in resources, talent and innovation against the public cloud providers (who have more resources to dedicate to engineering both product features and efficiency at scale).

Anybody but AWS?

Remember, given the competitive retail landscape, Walmart was hardly likely to run Amazon Web Services public cloud seeing as how Amazon.com is seen as Darth Vader by many of the rest of the retail universe. Target used Amazon.com (not AWS) for infrastructure but left the fold in 2011.

AWS would likely point out, if it were prone to comment on such things, that its cloud business is run as a separate entity than [company]Amazon.com[/company] — [company]Netflix[/company] is a huge customer after all and Amazon also runs Amazon instant video. But I’ve talked to other retailers who, off the record, will point to the political incorrectness of turning over key retail functions to Darth, er AWS.

Jeff Aden, co-founder of 2nd Watch, a systems integrator that works with customers to deploy AWS, said his company has several retail customers running on AWS, including Diane Von Furstenberg. Other AWS retail users include Gilt.com and Nordstrom Rack.

Mytton, conceded that AWS might be a tough sell for a big reseller to use, but why not throw in with [company]Google[/company] Cloud Platform or [company]Microsoft[/company] Azure? He points out that Ocado, the big British retailer is a Google cloud customer.

Last week I spoke with Sudhir Hasbe, director of software engineering BI and data services for Zulily, a members-only online fashion retailer that has fully embraced Google cloud services — BigQuery, Google Storage and Google Compute Engine. In this, Zulily is sort of a counter-narrative to the @Walmartlabs story.

Zulilly puts 9,000 new items on its site daily but wants to make sure it displays only the items that are relevant an potentially of interest to a given shopper. If you’re a woman who shops for herself and maybe a 6 year old boy, then she’ll see options for those demographics and not have to wade through the rest. “Search doesn’t work well in retail,” Hisbe said.

“For this we need the full big data platform so we can perform maximum data processing– what preferences do they have, what do they like. It also means when you have that much data, the whole supply chain side needs to consume it to make decisions,” he noted.

What’s nice about deploying Hadoop clusters on GCE, is that once the processing has run, the data is pushed into BigQuery where it’s available to all the business units and analysts, and the bill for Hadoop processing stops. The data is all stored in inexpensive Google Storage.

Anyway, feel free to comment on when and in what circumstances it makes sense to deploy public cloud or BYO private cloud. But please keep it polite.

Agree or not, Mark Cuban’s take on net neutrality is worth a listen

For those who missed, Mark Cuban visited the Structure Show last week to re-iterate/explain his thinking on net neutrality and why he thinks turning over internet governance to the FCC is a big mistake. Check it out below.

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Jeff Bezos: Raising the price of Amazon Prime was a great decision

Raising the price of Amazon Prime to $99 from $79 was the right decision, Jeff Bezos crowed in the company’s Q4 2014 earnings report released Thursday.

“The data is in and customers agree,” Bezos said:

On a base of tens of millions, worldwide paid membership grew 53 percent last year — 50 percent in the U.S. and even a bit faster outside the U.S. Prime is a one-of-a-kind, all-you-can-eat, physical-digital hybrid — in 2014 alone we paid billions of dollars for Prime shipping and invested $1.3 billion in Prime Instant Video. We’ll continue to work hard for our Prime members.

Of course, if you want to know the actual number of Prime subscribers you’re out of luck.

Revenue was $29.33 billion for the fourth quarter, up 15 percent over the same period last year, and a total of $88.99 billion for 2014, up 20 percent over 2013.

[company]Amazon[/company] also actually saw some profit — $214 million for the quarter, compared to $239 million for the same time in 2013. But for the full year Amazon lost money, seeing a net loss of $241 million in 2014 compared to profit of $274 million in 2013. After all, as Prime grows, so do shipping and video costs.

Amazon Web Services appears to be growing, and my colleague Barb Darrow has more on that here. The “other” category of the earnings report, which includes AWS, pulled in $1.67 billion for the quarter, up 43 percent over the same time last year.

Amazon is holding an investor call at 2 p.m. PT and I’ll be on the call.

This post was updated several times on Thursday afternoon.

UMass Amherst will source textbooks from Amazon

Starting next year, students at UMass Amherst will get their text books not from a campus bookstore but from Amazon.com. The news was reported Tuesday in The Boston Globe

Under a 5-year agreement, [company]Amazon[/company] will get a 2.5 percent cut on e-books or their physical counterparts — available with one-day delivery —  sold via a dedicated storefront. Amazon told the Globe that students will save up to $380 a year.  Amazon will pay the school a minimum of $375,000, $465,000, and $610,000 in the first three years, respectively.

Amazon offers a similar program at Purdue and University of California, Davis.

This story was updaed at 3:59 p.m. PST to reflect that UMass, not Amazon, gets a 2.5 percent commission on books sold.

Amazon CTO Werner Vogels: Cloud and SaaS are going global, fast

Amazon’s cloud services helped jump start a lot of entrepreneurial activity and now its globe trotting, maverick CTO Werner Vogels believes it help global small and medium sized businesses embrace the cloud and SaaS — which in the end is a good news for AWS.