It was a world before the Amazon EC3 was available. Google needed servers and all they could lay their hands on were cheap and commodity hardware. In the true spirit of engineering, what came about was the solution of clustering all of them together to provide the same level of performance and efficiency that expensive servers were providing. It solved them a major issue, and gave them a leap ahead in a time when Amazon hadnt thought about providing web services yet. [Jump to See Image of Google's First Server]

Fast forward to the present.

We have a world where gaming machines are more powerful that desktops and servers are. The marketing strategies of these two behemoths (Microsoft and Sony) are such that they are selling the machines at a loss and making up for the losses in the sale of games.

After the computing gods there be, launched the cell architecture processors in the game machines, they have also released them as computing platforms. IBM has them in the blade format, which costs close to $18,000.

IBM BladeCenter QS20 $18,995 (Dual Processor)

IBM BladeCentre QS21 $9,995.00 (Single)

Terrasoft, the company behind Yellow dog Linux, and Rapidmind have released a version of linux that can run on top of the PS3. That was last year.

I am sure there are some projects going on in this space. I did see a site sometime back which was dedicated to the work that was going on by clustering 70 nodes of Playstation 2 devices. But I havent heard, nor am familiar with any of the startups exploiting this opportunity.

There are two mammoth corporations who are subsiding hardware for a different strategy. You could essentially buy the same hardware at one 18th/9th the price, get free software which could convert it into a computing platform, and expand on that power. There will be some issues if you are using any extension cards like IP Telephony devices or so to run any of the services, but for companies which are purely focused on the web services part, having a cluster of such powerful machines might very well prove to be a long term strategy to keep costs down, and yet not compromise on the performance of your systems.

Plus think about it, when you are having a slowdown, you could very well pull out one of the machines and have a death match with your co-founder

I think I have figured something. It goes something like this.

Markets and Companies are neither created nor destroyed. They just transform from one form to the another.

I’ll give you some examples. Amazon.com when it started in 95 was a very ambitious project. A few years later, they were raking in 30million dollars as revenues. But where did that money come from? Very few people think about it, but customers are a finite set. God isn’t growing customers on trees yet. So essentially what happens is that since the need hasn’t exemplified, just found a better solution, people switch from one service to another. The year that Amazon.com announced its $30mn revenue stream, the music and bookstore industry had lost close to 2billion dollars. Disruptive? Yep, if you are a startup and on the growth curve, very much so. Scary? Absolutely. Especially if you are three days old and even have a handful of customers.

I think this is a very basic understand that we need to have. Markets are not created. All this talk on Markets, and blah is just a segmentation process that economists and entrepreneurs have to work with to figure out how to shape their product. The truth is that there are consumers and consumers or clients are essentially people. And People are finite. if you work backwards, then so are markets.

It is also important to understand that whenever there is a drastic shift from one trend to another, millions of businesses die. The chain stores of Walmart put out thousands of Mom-and-pop corner shops and there are enough stories about how retail bookstore chains put family-owned bookstores out of business in the US. Take our own case. It will not be too long before the reliance retails, and the Subiksha’s start threatening our friendly neighbourhood stores – if it hasnt already.

In the web world, Orkut defined the success of a Social network, along with Myspace. Both of them are losing steam now – which is because they are losing their active users. I very rarely login into my Orkut account these days and have been in Facebook for most of the time. I wouldn’t be surprised if OpenSocial, with its applications will give me another option to choose from, not too far from now.

So Lets come even closer to home. India enjoys 4.2 million users online. Quite a shameful number, but thats what it is and we cant do much about it. Fropper and BigAdda, both claim that they have about a million users+ signed up. Where does that leave things? If we do the statistics that 50% of the Indian population is below the age of 25, and I assume that this is the group which will want to “socially network”, along with the active business community, I’d break the 4.2 million into half and say I can guarantee half of it to have the craving for social networking. That essentially brings it down to the sum that Fropper and Bigadda seem to claim. So, who’s left? Anyone who has to get into that space now, essentially will have to shave off people from one of these two big guys. If you want to get into that space, you tell me what your strategy is for survival and it better be good.

This applies in a whole lot of other places. For example, In India we have very few Product review sites for Startups. Webyantra was one, and Pluggd.in is another. Now that Amit is lately busy building Slideshare, if you do look at Alexa, it is quite evident that Pluggd.in is enjoying the traffic from Webyantra and the number are slowly sliding on one end and adding up to the other. Once again, it seems as much as we all do keep an eye on multiple things, there is one preferential location we visit over and over again – our prima interface.

If you want more examples, look at the case of IE vs. Firefox. More Firefox users essentially translate to less IE and Safari users. I could almost live without IE on my computer if there was a way to make it all go away.

Lets make it more personal and recent. When it came to Microblogging, I was dragged into Pownce because a whole lot of others were using it. And as much as Twitter was making a lot of noises, I stayed away from it cause I don’t want to create so many accounts (Someone needs to enforce openID in all services). I did realize lately that the tables had turned and there are more folks that I know who are on Twitter, compared to Pownce. The choice was inevitable. All I had to say was Goodbye Pownce and Hello Twitter. And Yes you can click on the link and “follow” me, if you’d like.

Perhaps even Bush was right. When it comes to a consumer, there is no this “and” that. The customer is either with or against. Either with you fueling your growth, or helping the other one put you out of business. Eventually it comes down to one strong alliance. It’s better to figure out what your strategy is going to be, to ensure that you are your market’s first preference.

Update: Ganesh Rengaswamy, a friend, made a comment that while markets transition, they also improve. While the traditional bookstores lost a lot of money and amazon.com snatched away those consumers, there were new ways of doing things that were established. I do agree with him.

In my dictionary, Amazon.com is one of the few web destinations, which truly stands upto what “e-commerce” means in its entirety. Jeff comes quite close to an aspiration in that matter as to how he envisioned the grand and made it happen, and still goes on attempting (the kindle is a good try to say the least) new things.

Fortune magazine has a story on him, with quite a bit of meat and some very good take-aways on consumer insights and how a 300 million dollar fulfillment house powers amazon.com and some wise moves that went behind the growth of the company bringing it to where it is now.

Read the Article here>

Two great companies run by great visionaries. Paypal and Amazon.com. One transpired to become the biggest bookstore the world has ever seen – yet. The other became the eCommerce backbone for most of the internet business that goes on around.

All due credits and salutations aside, i do have somethings against these two companies.

When people were talking about stacking up more books and creating bookstore chains, what Amazon.com did, by means of Jeff’s vision was extraordinary. Make the biggest bookstore and have it online. Well, so far so good. The question is, did it live up to its potential? If a national reach or continental (north american) reach was what they were aiming for, aren’t there cheaper and alternative ways to go about it?

I know that I can find most of the books that I am looking for on Amazon.com. When it comes to indian context and some of the literary works, it is still hard to find them on Amazon.com, and their second hand book collections and process is still one that needs ironing out.

What Amazon.com didn’t do is make the bookstore truly global. Apart from using it for looking up ISBN numbers and to make a custom order in a local bookstore, amazon.com hasnt changed the lives of everyone yet. With most of the emerging markets being outside of india, and cost being a restricting factor (shipping today to India costs a lot), this is the market that Amazon.com should be aiming for. Question is, if they are.

Paypal. Western union lost a big fat chunky chance with letting this slip. For those of you who aren’t aware, Western union was given a chance to buyout Paypal. Imagine the global network of wire transfer and the online commerce network both combined. It could have been simply a dynamite combination. Western Union missed out on that opportunity.

What Paypal was missing out on was the option to make transfers to local banks. They made an annoucement recently so that we can make a transfer from our paypal account directly to an indian local branch – which is quite a hip hip hurray news for most indian internet businesses. We still do have an issue with the dollar to Ruppee conversion. With the dollar steadily falling and with the rising economy, it would be better to receive the payment in Indian ruppees and withdraw it in ruppees later on – since there is a minimum transfer amount associated with paypal transfers. I hope Paypal will get to that soon.

I would also like Paypal to extend their services to mobile devices, or align themselves to the likes of MChek or Indopay (in India). The hope is that Paypal wouldnt commit the same mistake that WU did, long time back.

If Paypal does play its cards right, they’d be the next contender after Visa and Mastercard. let’s see.