Amazon.com to Fund Elastra's Cloud Computing Effort

Elastra, one of a slew of startups creating platforms that host and run software entirely on the Internet, has just banked $12 million in funding from a pack of investors that includes cloud computing forbearer Amazon.com.

Cloud computing is the new catch phrase for utility computing, where customers buy computing power from a provider that hosts the software infrastructure applications on its own server computers and storage arrays.

That lets the customer save themselves the hassle and cash of having to purchase their own hardware and software; ostensibly, the customer rents the computing power necessary to run the applications they use on the Internet. This is a sign of the increasing Webification of the working world, where the Internet is the platform.

To wit, Elastra believes businesses and IT organizations want to focus on other business activities rather than writing code, scaling and monitoring their application infrastructure by hand.

This is why it makes and sells Elastra Cloud Server, a software platform that lets customers configure and deploy applications across the Web from a computer screen by pointing and clicking the mouse. The server then manages these apps on the fly.

"Enterprises are moving into the cloud and understand its financial value, but they need software that lets them deploy and manage applications that meet complex requirements," said Kirill Sheynkman, Elastra's founder and CEO.

The investment in Elastra is led by Bay Partners with Bay's Neal Dempsey joining Elastra's board. Included in the investment round are Hummer Winblad Venture Partners and new investor Amazon.com, whose involvement signals the interest in this type of computing.

Elastra said it will use the funds to buildup its software for cloud computing and lure new customers.

That Amazon.com is chipping in cash is no surprise. The company's AWS (Amazon Web Services) unit has provided cloud computing and storage infrastructure services via the Web to dozens of customers for over two years.

Coghead, a rival Internet application provider to Elastra, uses AWS' EC2 (Elastic Compute Cloud) and S3 (Simple Storage Service) as the backbone of its platform.

Salesforce.com, Etelos and Bungee Labs also run CRM and other enterprise applications for companies, while Google, Yahoo and Microsoft all fuel various Internet services online.

The new investment in Elastra makes me think Amazon.com is positioning itself for an acquisition of the company if its efficient user interface proves useful for AWS.

I haven't heard complaints of poor usability for EC2 or S3, but that doesn't mean that they don't exist.