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Amazon web services puts snag behind it, sees more cloud

By Siddharth Cavale and Nivedita Bhattacharjee

BANGALORE (Reuters) - Amazon's cloud computing unit has taken steps to avoid a repeat of the outage of its cloud services platform earlier this year and customer interest has only grown since, a top company executive said.

The outage in April, which knocked out such sites as Reddit and Foursquare, had raised questions about the future and maturity of cloud computing.

"We are going to see more medium and large companies putting very significant amounts of their IT in the cloud going ahead," Adam Selipsky, vice president at Amazon Web Services (AWS), told Reuters in Bangalore, India.

AWS, the world's largest cloud-based service provider, has been a pioneer in the business, which offers computing power and storage remotely to enterprise clients.

The unit currently accounts for only about 2 percent of Amazon's revenues, but is expected to become the online retail giant's next billion-dollar business.

"Over the (next few) years you are going to see a lot of back-end enterprise applications moved to the cloud," said Selipsky, who was attending a summit organized by Nasscom, an Indian IT industry lobby group.

The Harvard Business School graduate, who joined AWS in 2005 from RealNetworks, said the outage in April made AWS try and separate the dependency on individual data centers by increasing their numbers and geographic spread.

"The more the multiple availabilities, the higher the resilience ... that means that if a tornado hits one, it's not going to affect the other one."

AWS, which competes with the likes of Google's App Engine, Microsoft's Azure platform among several others, counts the U.S. space agency NASA, the U.S. Department of State, Siemens, Netflix and Nasdaq among its customers.

Amazon's cloud services are also seeing increased interest from customers in India, especially those who serve international markets, Selipsky said.

He said the business has managed to maintain margins despite lowering prices more than 15 times in the last four years.

"We think the economics of AWS is very strong. A lot of tech companies have a strategy of having high prices and high margins- nothing wrong with that. It happens not to be our strategy."

(Reporting by Nivedita Bhattacharjee and Siddharth Cavale in Bangalore; Editing by Saumyadeb Chakrabarty)

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