Amazon Is Pushing To Dominate The Cloud Battle

  • Amazon realizes that the future is in the cloud and not in hardware.
  • Amazon's cloud offering is the fastest growing segment of its business.
  • Amazon has the largest market share and is due to expand AWS at a rapid pace.

Arguably, we are reaching a time when there is little likelihood of significant growth in the consumer electronics industry. Even Apple Inc. (NSDQ:AAPL) is experiencing a slowdown in sales, which is why the iPhone SE was necessary to get some revenue from the midrange smartphone market. We have also reached a stage whereby there is little differentiating smartphones in the market, and consumers are spoiled for choice.

It seems as if we are approaching the limitations of smartphones and tablets. As a result, companies have been looking for the next big thing. Not only have they found it, but Amazon (NSDQ:AMZN) has built a significant lead between themselves and their competitors.

The cloud

Interestingly, the next big thing in tech is something that isn’t physical. As internet access and speeds increase, and more of our lives intertwine with it, there is a lot of demand for cloud services. Developers need it to host some of their biggest projects, and businesses need it in order to scale up in a cost-efficient manner. Moreover, this is the next global revolution. We moved from the industrial revolution to some of the tools which impact our lives each day being in the form of apps and cloud-based software.

And Amazon almost has it all in their hands.

Amazon brought in $7 billion from their AWS offering in 2015. At this moment, not even Google can claim to have the cloud infrastructure Amazon enjoys. Amazon has 20 data regions whereas Google currently has 4. Moving forward, dominance in the cloud market will be like land ownership was before the industrial revolution. For the companies which are able to get a strong position for themselves, they stand to increase their revenue over the long-term.

It isn’t just companies based in America which are taking advantage of the cloud opportunity. For instance, Alibaba has their own offering, which looks eerily similar to that of Amazon.

New, lucrative revenue stream

Last year Amazon was able to overtake Walmart as the world’s largest retailer, and despite recent developments such as impending drone delivery, own-brand items, and the continued dominance of their Kindle line, Amazon is likely to trump all that success using their AWS offering.

As the cloud becomes increasingly important, more companies will want to have their data handled by a trusted company. Not only does it make their operations more convenient, but it also allows them to upscale and downscale according to the demands of their business.

In fact, Netflix, Amazon’s biggest rival in the movies streaming space has actually moved its content to AWS in order to provide a better service to customers. Moving forward, more companies are likely to make the move. As previously alluded, when one considers the cost of operating a data centre, including the cost of upkeep, paying staff and energy bills, it is more cost-efficient to go with a cloud offering like AWS.

Globally, we are moving to a more sharing based economy, and this allows consumers and businesses to get access to products and services more quickly. For instance, we can now visit most countries and quickly rent out a property during our stay. This allows us to “skip” the red tape of renting a property by traditional means. There is also Uber which has been able to empower people using an app and cloud technology. Moreover, anyone can create an app, deploy it via AWS, and market it via Facebook ads in a few minutes.

The world is getting quicker, and Amazon was able to foresee this shift and launch AWS to take advantage of this momentum.


In conclusion, AWS is another prime example of Amazons uncanny ability to be able to spot trends and create a unique offering to meet it. They have been criticized for reinvesting profits and not providing investors with adequate returns. We are now beginning to see that this was an intelligent move. It is difficult to quantify just how big Amazon could become if they continue growing at this pace. Moreover, there is truly no other company like them.

Amazon is a good addition to your portfolio; there I say it, essential. It is currently in a similar position as to what Walmart (NYSE:WMT) was in the 90s in the sense that it is a stock good to keep for the long-term.

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  • I do not have any business relationship with the companies mentioned in this post.
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