Amazon AWS: Unbeatable cloud competitor?

Summary:When Amazon cuts prices on its cloud services everyone else follows – and sometimes their share price also gets cut.

David Linthicum in his Cloud Computing column writes: The proof is in: Amazon fully controls the cloud

Amazon Web Services (AWS) recently cut prices for its dedicated instances, the basis for its Virtual Private Cloud offering. If you've been keeping track, this is its 37th price reduction.

The day AWS announced the news, the price of Rackspace's stock dropped as well. The smaller providers competing with AWS got one more tough call to make to their investors: when to drop their prices. (Rackspace did so on Wednesday.) Finally, Hewlett-Packard, IBM, Microsoft, and the other big guys also have to lower their quotes to be competitive with AWS.

He argues that lower prices are great for moving companies to cloud adoption but is AWS building a position of market dominance reminiscent of Microsoft?

The bad: That already-a-winner controls the market, and it can get lazy or stupid, hurting everyone. . .we have to remember we'll want other providers around should AWS ever go off track.

There's another aspect to Amazon: it has huge revenues and doesn't care if it makes a loss or a very small profit. 2012 revenues of $64 billion and it still managed to lose money. And importantly: its shareholders stick with it.

That's not true for Rackspace, Hewlett-Packard, IBM, Microsoft, etc. If they miss earnings then Wall Street punishes them. 

Who can win against a competitor that isn't all that concerned about making money? 

Topics: Amazon

About

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.Tom arrived in San Francisco in 1984, and has covered US technology markets for leadi... Full Bio

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