Google and Amazon Vie for Start-Up Help Domination

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Includes: AMZN, GOOG
by: James Nicholson

Google’s launch of its Google Apps Engine web hosting service on Monday puts it in direct competition with Amazon’s web services offerings. But Google’s step goes beyond hosting web applications for startups - the company is now directly vying with Amazon to become the foundation upon which to build new Internet companies.

Here are the services from each company that start-ups can’t live without:

Google Apps Engine: while brand new, this looks to be an excellent, scalable platform upon which to build and host web-based applications. Google needs to roll-out support for PHP and Ruby as soon as possible, as so many startups are now using these languages. Given its resources, one can only assume that Google will offer a significantly lower price for its web services than Amazon.

Google AdSense: almost every ad-based Internet company starts with running Google’s AdSense ads. It’s quick and easy to set-up and can start generating revenue from day one. The only problem: ridiculously low ad rates. Google now needs to do a better job of capturing companies when they start to outgrow AdSense. Hopefully the DoubleClick aquisition will come in handy for that.

Google APIs (Application Programming Interface). From Android to the Maps API to Open Social, Google has been a leader in opening up its applications for outside companies to use. Startups have built entire websites around these open APIs.

Google Analytics: this free website tracking program is awesome and used by almost every startup I know. Google just introduced benchmarking, allowing you to compare your site traffic to other similar sites in an anonymous way.

Amazon web services. Before Google Apps Engine came along, Amazon’s AWS offering was the leading “cloud” computing offering. The beauty of AWS is the scalable pay rate: you only pay for the traffic you get. Many start-ups host websites on AWS and pay the hosting fees from Google AdSense ads running on their site. Amazon wisely priced AWS low enough for even low yielding ads to offset the hosting fee.

Amazon Mechanical Turk. Mechanical Turk hasn’t gotten a lot of press, but lots of start-ups turn to it to get big menial tasks done fast. MTurk allows companies to post small jobs (like find the RSS feed for a particular publication) at a specific price and then worker bees from around the world complete the job with Amazon as the middleman.

The next step for either Google or Amazon to become an even more vital resource for startups is to play matchmaker between companies and developers. Elance.com is a major player in connecting companies with offshore engineers, developers and designers.

Imagine if Google got into this space and had a list of approved developers from around the world who knew how to build on the App Engine platform, and then changed a fee to connect these developers with interested companies. Google could then offer startups a closed-loop process: build your site using our developers, host it on our servers, and make money running our ads. It’s called printing money.

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