Amazon Faces Growing Competition in Lucrative Cloud Business

Amazon is the current leader in the cloud computing business, with its Amazon Web Services division bringing in $1.57 billion in just the first quarter, but Microsoft and Google have their eye on a market that is projected to be worth hundreds of billions of dollars. To maintain its lead, Amazon has rushed to provide other software and analytics services and increased its network of resellers. The real winner, though, will be determined by what company hosts established enterprises.

Amazon Web Services is increasingly becoming a key component of the Amazon’s business. What started out as an internal service has become a popular commercial product for startups that need more computing power. Now, it is one of the most profitable divisions of Amazon, and it has been growing at 40 percent per year, more than twice the rate of the overall company.

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That doesn’t mean that it’s not facing increasing pressure from Microsoft and Google. Microsoft is second in the cloud infrastructure market, with about 10 percent of the market share, compared to Amazon Web Service’s 28 percent. Microsoft’s cloud computing business more than doubled from last year.

Google also started lowering its prices, which forced Amazon to do the same and cut profit margins.

Amazon started adding other services, such as database software, analytics, and remote operation, and adding more resellers to its network, but the real winner in this growing market will be determined by which company can lure large companies, according to The New York Times.

Analysts believe Microsoft might have an advantage there because big businesses are already using the company’s software and PCs, but startups may still stick with Amazon because it is not dependent on Windows.