Amazon Propositions Uncle Sam

Who says Uncle Sam is too old for the latest technology? According to The Washington Post, federal authorities are not only for, but are encouraging, agencies to move operations to the cloud. Amazon.com (Nasdaq: AMZN  ) is hoping to take advantage with a new Amazon Web Services business called GovCloud.

The thesis is simple. Create a secure, dedicated infrastructure for agencies that don't want to host their own. Restrict access to those who are government employees and U.S. citizens. Then, when all goes smoothly, cash big checks from the feds. The plan seems to be working so far.

Amazon has been engaging with various departments for more than a year now. Last March, the U.S. Recovery Accountability and Transparency Board migrated to AWS and saved $750,000, the company said in a press release.

Pleased with the results, GovCloud formalizes Amazon's efforts to win additional federal business. Competitors aren't sitting idle, of course. Rackspace Hosting (NYSE: RAX  ) has a relationship with GlobalNet for government site hosting, while AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) both offer similar services.

But it's AWS that has long been a favorite of new businesses tapping into the cloud computing zeitgeist. Clients include Foursquare, Yelp, and Qlik Technologies (Nasdaq: QLIK  ) . President Obama is now on Foursquare; having his tech team do more business with Amazon Web Services -- the backbone of Foursquare -- seems natural in all but one way: AWS has suffered stability problems in recent months.

I know; I get the irony. AWS has suffered outages as Congress and regulators have struggled to stabilize the U.S. economy. Government success hasn't come easy. (Or at all, in some cases.) Contextually, this looks less like a smart partnership and more like a cruel joke.

And yet the president and his team may have no choice. The truth about cloud computing is that, over the short term, it costs a lot less to activate someone else's servers and software than to build and secure your own infrastructure. Uncle Sam needs the extra dough. Do you agree? Disagree? Weigh in using the comments box below. You can also add Amazon.com to your watchlist for up-to-date analysis on the stock as soon as it's published.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Qlik Technologies at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Qlik Technologies. Motley Fool newsletter services have recommended buying shares of Qlik Technologies, AT&T, Rackspace Hosting, and Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1544164, ~/Articles/ArticleHandler.aspx, 11/21/2014 7:32:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement