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Amazon Web Service is launching a new web service tonight called S3 – which stands for “Simple Storage Service”. It is a storage service backend for developers that offers “a highly scalable, reliable, and low-latency data storage infrastructure at very low costs”.

I was able to speak with Adam Selipsky (Amazon Web Services VP of Product Management and Developer Relations), Dave Barth (Product Manager for Amazon S3) and Andrew Herdener (Senior Public Relations Manager for Amazon) today about the service.

They’ve built the back end for the number one requested company that I wrote about late last year – reliable and cheap online storage. I’ve been watching this space very closely, even profiling a number of new entrants, and I have to say that S3 changes the game entirely. Move over Google Drive, Amazon just stole your thunder (for now).

Until now, a sophisticated and scalable data storage infrastructure like Amazon’s has been beyond the reach of small developers. Amazon S3 enables any developer to leverage Amazon’s own benefits of massive scale with no up-front investment or performance compromises. Developers are now free to innovate knowing that no matter how successful their businesses become, it will be inexpensive and simple to ensure their data is quickly accessible, always available, and secure.

Here are the facts: This is a web service, and so Amazon is not releasing a customer facing service. They are offering standards-based REST and SOAP web services interfaces for developers. Entire classes of companies can be built on S3 that would not have been possible before due to infrastructure costs for the developer.

Virtually any file type is allowed, up to 5 GB. Files may be set as public, shared or private and will have a unique URL.

Pricing is cheaper than anything else I’ve seen: $0.15 per GB of storage per month, and $0.20 for each GB of data transferred up or downstream. This translates to $15 per month for 100 GB of storage, net of any transfer fees (to move that much data on to S3 would be a one time cost of $20). These prices are going to be significantly below the development and ongoing costs for small or medium sized storage projects – meaning a lot of the front end services I’ve previously profiled will be much better off moving their entire back end to S3.

This is game changing.

See Rob Hof at Business Week for his thoughts on S3 as well. He says “it should put to rest the notion, still popular among a few analysts, that Amazon is just a retailer.”

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