[avenger123]

Does Netflix get special pricing for AWS? With their scale, they could probably negotiate with Amazon for lower rates.

[yoda_sl]

Not only Netflix they get some better price (I have no info but it will not be surprising) but I have even heard that Netflix do work with the AWS team to test first some new features before AWS release it to a larger public.

I have even heard that a couple AWS service were in fact created because Netflix was asking for it.

Netflix being probably the most visible company on AWS, I am sure they do have some special deal with Amazon.

Anyway concerning the news, it will be interesting to see Adrian in his new role! He is a great guy!

[mathattack]

This type of relationship is common with firms and their largest leading edge customers. It helps both, and it pushes the market.

[kitcar]

One thing to note about a lot of "infrastructure" businesses is it can make business sense for them to offer deep discounts to large customers to cover their overhead - they then make their profit by selling whatever excess capacity is left over to smaller customers.

I.e. imagine you want to setup a new courier business. You convince Amazon to move all their shipping to your new courier company, by giving them a price which is almost unprofitable for you. You then make your profit on the excess capacity you have, by selling it to individuals who need shipping at more profitable prices.

[epa]

Although, scary business model if you lose that customer

[hvidgaard]

The trick is to have enough of those customers, so one leaving doesn't leave you bleeding.

[kitcar]

True. Get them to be an investor in your firm, and that risk is reduced.

[encoderer]

Actually, many many companies (including a startup I once worked for) had negotiated rates w/ Amazon. Netflix is certainly paying far less than sticker price.

[zorked]

Certainly, see for example https://aws.amazon.com/ec2/reserved-instances/, search for "Scale with your Business". Similar discounts exist for most of their other services.

[Xorlev]

Not to mention, Netflix is a flagship customer for AWS and directly results in AWS getting more business, so I'd expect the discounts to be even deeper for Netflix.

[rtpg]

I remember reading something about how AWS is pretty much running very close to at cost (super razor-thin margins, just like the Amazon shops themselves),but seeing these numbers seems to imply otherwise (20% is a big chunk of change).

[piggity]

Amazon (the mothership) runs at a loss [1]

It is predicted that Amazon AWS runs at a huge margin [2]

Of course it's possible that these number are skewed by some Irish Whiskey Double Dutch Vegemite Sandwich tax avoidance system.

[1] http://venturebeat.com/2013/10/24/red-is-the-new-green-for-a...

[2] http://venturebeat.com/2013/09/05/amazons-mountain-of-margin...

[raverbashing]

"AWS is pretty much running very close to at cost (super razor-thin margins"

Compare the Amazon price with other VPSs.

It's a different service, yes, but it's not even close, not even if you reserve the instances (it's been a while since I did the math though)

But for small scale, I recommend strongly against AWS

[nasalgoat]

Isn't the opposite true? It's fine for under 10 instances when you're first starting up and still flexible, but over that you're better off going colo?

[dmourati]

I've described AWS as a great "deal" for very small and for very large customers. For people in the middle, not so much.

[Xorlev]

Also depends on what you consider a deal -- the lower tier hardware works for a Wordpress blog, but not necessarily for much more. For the price, a good Linode or even a dedicated server will get you more bang for the buck.

[dmourati]

They most certainly do.