Amazon Revolution

Jeff Bezos founded Amazon with the intention of revolutionizing e-commerce. He wanted to make Amazon the largest global online retailer and has, on many fronts succeeded. Amazon initially started off as an online book retailer and according to Adam Penenberg, ???…Amazon has, over in 14-year history, developed into a monstrous cybermall, offering millions of products and accumulating a market capitalization north of $34 billion??? (2009).
According to Rainer & Turban, by 2007 Amazon had spent over two billion dollars on infrastructure for its online store, but only 10% of its processing capacity is used at any one time. To make use of its unused processing capacity, Amazon has decided to offer storage and other services to other companies at a fee (2008). From this picture, it is clear that Amazon is not moving away from its core competency of being a leading online retailer rather it is making use of its infrastructure and resources to improve its falling profits.
Even though Amazon??™s Strategy is to stay competitive, the online retail giant??™s profits have fallen, with operating margins at 4.1 % less than Wal-Mart??™s 5.9 percent??? (Rainer &Turban, 2008). In addition to that, Amazon has not recorded consistent profit growth. Therefore, the strategy to offer other companies and individuals the use of its unused resources is a wise move. The components of the Amazon database that allows it to offer these services are the Simple Storage Service (S3) that provides storage space for data and applications on Amazon??™s unused disk drives. For this service, Amazon charges 15 cents per terabyte. The Elastic Compute Cloud (EC2) allows clients to use Amazons processing power for which Amazon charges an hourly rate of 10 cents for the equivalent of one basic server. The third service that Amazon offers uses the Mechanical Turk, which is a combination of processing power and networks of real people who ensure that data has appropriate content and also to transcribe audio (Rainer & Turban, 2008).
With these services Amazon provides a twofold solution. One is providing businesses and individual storage space and the ability to process large amounts of data quickly. The other is generating income that will help to increase its profits and create growth. ???According to Rainer & Turban, managing data in organization is not an easy task because data are handled by many people, comes from multiple sources, are stored in numerous places, the sources of data change frequently, and finally because the amount of data increases over time (2008). In Amazon??™s case, the sheer size of its database makes it inevitable that data management issues will occur. For example, over the years there may be an increase in editions for books, especially academic books and Amazon will have to come up with the best way to list these items depending on sales, reviews, price and demand. Another problem Amazon may encounter is figuring out the best way to incorporate all the data coming from different sources into a uniform format. .
Data is a collection of recorded, classified, and stored events, activities, and transactions that when processed becomes information. Information becomes knowledge when it is organized and processed because it adds value and meaning to the recipient. Knowledge then becomes information on which a recipient can relate or act on.
Amazon uses the relationship among data, information, and knowledge to maximize their sales and operations. For example, Amazon collects data on products highly in demand and what at prices customers are buying them. Amazon then uses this information to figure out which products and services to list on its web site. It also uses this information for pricing, reviews, and providing recommendations based on similar products that have been purchased by other customers. This knowledge helps potential customers make information decisions.
References
Penenberg,? A.(2009). The Evolution of Amazon.? Fast Company,(137),? 66-72,74.?  Retrieved February 6, 2010, from ABI/INFORM Global. (Document ID:? 1793479441).
Rainer, R.k. & Turban,E. (2008). Introduction to Information Systems. Retrieved February 6, 2010 from Axia college XBIS/219 Business Information Systems Course web site