The Glitch That Stole Christmas (Eve)

Just as some folks were settling on their couches for a long winter’s eve of marathon movie streaming the night before Christmas -- from “Jimmy” to “Bing” to “Macaulay” to Miss Piggy –- Netflix went kerflooey.

It was a “snafu” of the variety that “rattles customers,” the hed on the Greg Bensiger’s story in the Wall Street Journal tells us. “Netflix said the outage lasted nearly half a day for some of its users, and stemmed from problems with Amazon's Web Services unit, or AWS, which manages online operations for many companies.”

Indeed, it was actually Amazon.com‘s servers in Northern Virginia that went kerflooey, leaving some of its cloud service customers –- most notably Netflix –- “with a bone to pick,” as the Forbes hed puts it. That’s particularly since “at the same time, millions of Amazon Prime subscribers were free to watch “Thor,” “Deep Impact,” “Everything is Illuminated” and a hodgepodge of other films and TV shows, writes Louis Bedigian. It turns out that Amazon’s own streaming service did not suffer a similar glitch.

The New York Times’ Brian X. Chen talks to a Long Island couple who “decided to ‘nerd it up’” by playing a few games of Minecraft when the episode of “It’s Always Sunny in Philadelphia” they were viewing “started to stammer and finally froze.”

On the positive side, a Netflix spokesman tells him, “We are happy that people opening gifts of Netflix or Netflix-capable devices on Christmas morning could watch TV shows and movies and apologize for any inconvenience caused Christmas Eve.”

CNN’s Doug Gross, meanwhile, kept his eye on some Twitter feeds and offered a few gems from disgruntled and disheartened Netflix customers:

"So @netflix is down? Great. Now everybody has to talk to their annoying family," wrote Chris D'Elia (@chrisdelia).

"So depressed about Netflix being down that all I wanna do is lie on the couch and watch Netflix," tweeted Jess Dweck (@TheDweck).

But Aaron Zamost (‏@zamosta) gets to the heart of the matter when he tweets: "Amazon Web Services crashes on Christmas Eve, taking out Netflix but not Amazon Video. Somewhere, (Amazon CEO) Jeff Bezos reads ‘The Grinch’ to his kids.”

While Tweeters –- as is Hollywood itself –- may be great at weaving conspiracy theories, many analysts point out that Amazon would not shoot itself in the foot by sabotaging a rival streaming service.

“The latest service failure comes at a critical time for Amazon, which is betting that AWS can become a significant profit generator even if the economy continues to stagnate,” points out Reuter’s Jim Finkle. “Moreover, it is increasingly targeting larger corporate clients that have traditionally shied away from moving critical applications onto AWS.”

"Our goal remains to make our operational performance indistinguishable from perfect, and we know we have more work to do," an Amazon spokeswomen tells the WSJ’s Bensiger. "Our operational performance has been quite strong over the last seven years and is one of the key reasons we've grown as quickly as we have."

And while Netflix and others may be weighing their options and planning for future contingencies, the holiday glitch is “unlikely to severely hurt a fast-growing business for the cloud-computing pioneer that got into the sector in 2006 and has historically experienced few outages,” writes Finkle.

"The benefits still outweigh the risks," Global Equities Research analyst Trip Chowdhry tells him. "When it comes to the cloud, Amazon has got it right."

The larger question for companies such as Netflix that rely on AWS, writes Reuters’ Finkle, will be” how they configure their services and allocate their service requirements across multiple providers to mitigate over-dependency and risks.”

For Netflix, “service was eventually restored the next day, but that’s quite an oops,” writes Robert Powell in the “Telecom Ramblings” blog. And even though he’s sure the outage was “unintentional and coincidental … Amazon’s position as both wholesale cloud provider and retail cloud streaming provider looks like a channel conflict that could arise elsewhere just as easily.”

The relationship between Netflix and Amazon, in fact, is a prime example of an emerging trend toward “’coopetition,’ as in cooperation plus competition,” writes Dan Bobkoff in American Public Radio’s “Marketplace.”

It’s an indication of “just how complicated the borders between companies have become,” Eric Clemons, a professor at the Wharton School at the University of Pennsylvania, tells him.  Or, says Ethan Kurzweil, vice president at venture capital firm Bessemer Venture Partners, “Frienemies. That’s another way to put it.”

Indeed, as Google and Apple have demonstrated time and again, “a frenenemy of yours is a frenenemy of mine.”

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