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Much earlier today at the Web 2.0 Summit, there was a fascinating chat between Amazon.com (NASDAQ:AMZN) CEO Jeff Bezos and tech book publishing magnate and conference co-host Tim O’Reilly.

Bezos tossed out some impressive stats about Amazon’s business - they will do over $10 billion in revenue this year, they have 61 million customer accounts, 1.1 million seller accounts and 10 million square feet of fulfillment centers.

But the real focus of his discussion was Amazon’s new adventure into providing Web based services. In particular, he highlighted the company’s new S3 service - S3 stands for simple storage services and its EC2 “elastic” computing services. The S3 service provides storage in the could - 15 cents per GB per month, plus 20 cents per GB of data transferred. The EC2 service provides computing power at the rate of 10 cents per computer hour; that’s $70 a month. The company is also offering a service that allows merchants to use Amazon to provide fulfillment services - you send them goods, they store them, and they send them to your customers when asked.

Bezos said the services allow startups remove the “muck” of setting up storage, computing and distribution services - services that Amazon has already built for itself - it’s “easy, cheap, and pay by the drink,” he says. “Wemake muck, so you don’t have to.”

Some other Bezos tidbits:

  • O’Reilly suggested that it was a little surprising to Amazon, rather than Google (NASDAQ:GOOG) or Microsoft (NASDAQ:MSFT), offering services of this variety. Bezos disagreed. "We’re the opposite of a dark horse. A lightly colored horse."
  • Bezos on why Amazon is entering the services business: “For 11 years, we’ve been operating a web-scale application, with high reliability, in a high volume, low margin business, very conscious of our cost structure. I always think high volume, low margin businesses are more defensive – we look at the absolute dollar level of profit and free cash flow…we’re good at it, we know how to do it, and we think it can be a meaningful financially attractive business one day.
  • Bezos on Amazon’s biggest costs: “Our biggest cost is not power, or servers, or people. It’s lack of utilization. It dominates all other costs.”

    Source: Amazon's Bezos On Why It's Entering The Services Biz