Amazon Takes Data Down Under

Australia is looking cloudier. On Monday, Amazon.com (NASDAQ: AMZN  ) Chief Technology Officer Werner Vogels announced a new Amazon Web Services location in Sydney.

Vogels calls the new region "highly requested by companies worldwide" but especially for those needing fast access to AWS services for targeting customers in Australia and New Zealand. Shares of Amazon are up slightly on the news.

And why not? Recent efforts to expand and improve AWS helped the company withstand Superstorm Sandy's howling winds and thrashing waves. Widespread damage to Consolidated Edison (NYSE: ED  ) power facilities took out cell towers and several New York-based websites as AWS and Rackspace Hosting (NYSE: RAX  ) clients went largely unaffected.

Now, Amazon is bulking up further even as it eyes a larger opportunity worldwide. "I have visited Australia at least twice every year for the past four years and I have seen first-hand evidence of the tremendous interest there is in the AWS service," Vogels wrote in a blog post.

He's right, but interest isn't confined just to AWS. Customers are gravitating toward cloud computing as a whole. Researcher IDC says cloud service revenue is on track to grow 18.5% annualized from 2011 to 2016. More than $43 billion in worldwide revenue is expected to be at stake, up from $18.5 billion last year. Dozens are vying for a slice of that growth, but none more so than Amazon and Rackspace.

Others will spend to bulk up internal operations. Take Apple (NASDAQ: AAPL  ) and Microsoft (NASDAQ: MSFT  ) . The Mac maker nearly doubled its capital expenditures in fiscal 2012 while Mr. Softy still spends more than $2 billion annually to improve infrastructure. 

It's a fair bet a large portion of their spending -- more than $8 billion over the trailing 12 months in Apple's case -- is for data center buildouts to support the likes of iCloud and Windows Live, cash that might otherwise go to a hosting service such as AWS.

My own personal experience with AWS has been good so far. I've been using it to upload and host video. At the very least, I find AWS to be less obtuse than SharePoint and quite fast despite the distance between my home office in Colorado and Amazon's servers in Virginia.

Will Australian customers see similar benefits? Vogels says plenty already are, but with its sky-high valuation it's not surprising to see investors staying cautious when it comes to buying shares of Amazon. There's a lot more than AWS to consider, after all, which is why we've released a brand-new report explaining what's really driving the company's growth, and whether now is the time to buy. Our report also has you covered for a full year of free updates when the story changes -- just click here now to get started.


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