Are We Competing with Amazon?

As of a few minutes ago, Amazon web services launched an online storage platform for developers (thanks for the tip, Nik). Interestingly, we had been contacted by Amazon in early December to take part in an early project, which I'm now realizing was this. I turned down that offer because we were already 4 months into our new site and it was not reasonable to redesign our framework to support such a relationship. It's definitely interesting to finally know what they were putting together. So, the main question is, are we now competing with Amazon? In short, no. S3 is aimed at developers who want to tap into cheap storage for their applications through an open API. You see,'s storage offering is very different than this. And I quote:
Amazon S3 is intentionally built with a minimal feature set. The focus is on simplicity and robustness.
You see,'s goal is to let sites like and give their users a place to store their documents, photos, and files. But more importantly, since we act as a neutral back-end (and front-end), the user can move between other applications which use our storage and still have access to those same files. That is very different from what Amazon is offering. Amazon is intending their storage to act, in effect, as a web host. If you're looking for an easy way to offload large data from your site, this would definitely be the place to go (of course you will still need a server to get the data to them). Now that we've established that Amazon and are not competing against one another, you may wonder why we don't just use their storage. Beyond reliability issues, technical limitations of the API, and the troubles of outsourcing, lies the issue of bandwidth pricing. Amazon is charging $.20/gb for upstream and downstream transfer. Here is some simple math that I just posted on techcrunch regarding the costs of a free user:
Files need to pass through our servers before they are stored or distributed back to the user. This would make our bandwidth costs double (for each direction). We would be paying for Amazon’s cost, and our own. So if you wanted to store and retrieve 1GB in a month, the net effect is .40 (Amazon’s BW) +.15 (Amazon’s storage) +our BW and server costs. Now consider sharing, where this same user needs around 10GB transfer/mo for photos/clips/files, and we end up paying $2.20+.15+our BW and server costs.
If these were our costs for an average free account, we, or anyone who offered it, would be in business for no more than two months. Uncoupling storage from the application makes it impossible to have a practical business when you're paying for the bandwidth. All in all, this is why neither Amazon nor a web services API developer will be competing with (or google). Update#2: John has informed me that there may be around the double-bandwidth scenario. This may be possible in situations when the user needs to get straight to their file, however we do a lot of localized processing of the data before the user or the storage sees it. Update: Michael Arrington and Rob Hof have their comments on this release. By the way: Pending a company-wide decision, I think that "Sync without the think" will be the winner of our sync slogan contest.