Web service economics

Don McAskill, who runs a photo sharing service called SmugMug, has a very good writeup on how much money his company saves by using Amazon’s S3 (Simple Storage Service) rather than running his own storage solution. Aside from the pure economics (including the tax effect of reducing the asset base,) note the organizational focus implications: Since they let Amazon handle the technical details, they can concentrate on development and customer service.

(Via Scoble.)