Hacker News new | ask | show | jobs
by bwhiting2356 4 hours ago
what's the point of being vertically integrated if they're just going to rent out their compute (https://www.reuters.com/business/media-telecom/ai-startup-re...). This signals to me they don't have an internal use for it
2 comments

You could say the same about AWS circa 2011 though.
It's the reverse. The purpose of AWS was in 2011 was financial internal Amazon use. They had never invested in proper communication between the (many) parts of the Amazon webstore so everything was ad-hoc (like it still is in essentially every other company). If the website talked to an (internal) payment provider, that was one protocol. Another internal payment provider? Different protocol. Mail customers? SMTP (and not transactional like now, unless your website code implemented the transactional part).

That's what the first version of AWS was like. A standard set of interfaces. (you offer compute to the company? You implement these methods. You offer payment? You implement these methods. You offer ... etc)

They hadn't (yet) settled on a single RPC method but that's what it was. Then, as a financial innovation they started offering as many as possible to outside parties so they could use that money to pay for buildouts without loans, and a tax rebate on top. That's how AWS came to be. It had quite a few uses: it would simplify the amazon website, but most of all: it would allow for financial innovation in hosting the website (people still don't understand that when using AWS they what they are fundamentally doing is give Amazon better interest rates on loans to build datacenter hosting for their other activities. People still don't understand that the core of Amazon is not selling, is not AWS, it is financial innovation).

It was very much not a company selling to itself because it couldn't find outside buyers. It was a company selling to outsiders screaming to buy their internal products so the internal products would essentially be built for free and Uncle Sam would even provide tax rebates for building them (think about it: without AWS, Amazon datacenters are for internal use and tax is due on the equipment. With AWS Amazon datacenters are built to rent out and you can deduct any spend on building them ... smart, no?)

(that's also how Google cloud came to be, with very different emphasis and timeline)

AWS did not need to buy excess inventory from Amazon because the sales were down

They also didn't need to buy another company lead by Bezos because ot was going cost him very much if certain conditions are met

It signals to me that they like money and people are willing to give it to them at unprecedented levels, and probably still have plenty of capacity for themselves afterwards. Why would you not accept billions of dollars per month?
they have a healthy datacenter business. Does that justify their valuation?