Amazon.com has built a reputation for being an aggressive, take-no-prisoners kind of company, but it showed it's more cooperative side this week. Late last week, Internet traffic monitoring firm Keynote Systems issued a report that said many of the largest E-Commerce players will face major load-handling challenges for the holidays if they don't make major changes by the fourth quarter.
The report was important, but after so many years of holiday shopping seasons, some in the industry scoffed that the majors could be caught so short. To help out, Amazon generously knocked out its own servers for almost two hours on Monday.
OK, OK. Amazon probably didn't crash just to help Keynote make a point. But it's timing was impeccable nonetheless. It's interesting to note that within a few days this month , three of the industry's most powerful retail forces?Wal-Mart, Amazon and Google--all suffered problems that, one way or the other, can be classified as scalability-related.
Wal-Mart started last week, when it reported its first quarterly profit decline in 10 years. Even a magnificently profitable and well-run company is going to have a periodic profit decline. Indeed, from a statistical perspective, it's hard to have that not happen, so let's not make too much out of the decline. But it adds support to the argument that there comes a point when Wal-Mart's business model cannot grow any more. Can it become a trillion-dollar company? Maybe $10 trillion?
IT systems are the same way. The concept that bigger is more efficient has very definite limits, especially when one gets to Wal-Mart's size.
Then we move to Amazon. Like Wal-Mart, Amazon seems open to the idea of selling anything and everything to anyone. The larger the audience and the bigger the universe of products to bring in, stock and ship, the larger the margin of error becomes.
It's already difficult to accurately project how many people will visit your site on a given day. The only way to do that is to look at historical patterns, increase it by however much your budget allows and hope for the best. Many E-Commerce players have gotten quite good at it, often accurately projecting traffic within a few percent.
But as the size of the audience and the number of products offered soars, that "few percent" error can get to be a huge figure. Suddenly, buying enough bandwidth to handle traffic within XX percent of the historical figure can become extremely expensive. As Amazon grows, it's going to find defending against periodic traffic fluctuations more and more difficult.
The only E-Commerce giant to stumble this week was Google. To be fair, from an IT perspective, they didn't stumble at all. They got hit with a series of bad-news developments relating to retailer resistance to Google Checkout, a pair of traffic monitoring services reporting a drop in Google's search marketshare, a drop in Google's stock price and?believe it or not?pressure from Brazilian authorities to surrender more information that involves child pornography and neo-Nazis. (Note to Google PR: You typically want to never have your brand mentioned in the same sentence with child pornography and neo-Nazis.)
But the Google question has some similarities to the Wal-Mart question. Is the drop simply seasonal, as some have suggested, or is it another scalability red flag. Google's servers may be able to handle some ludicrously large number of Petabytes of storage, but can it be consistently better than other free alternatives?
The free nature of Web searching truly puts all of the pressure on pure quality. As Google has grown, it has gotten quite creative in expanding into new businesses. But how creative has it been on cleverly making its own searches more accurate and comprehensive? When was the last announcement of something that simply improved their searches?
Have the Goliath roles been reversed? Will some smaller and more creative pureplay search engine move in and disrupt the core of Google's business? Before it gets too much larger, it might serve Google well if a lot of its managers reread some of the key business disruption books adorning Amazon's virtual shelves. That is, of course, if the site is up.