Amazon's (NASDAQ:AMZN) Web Services business flies mostly under the radar of most of the company's enormous customer base.
It's not a sexy proposition or even a business that impacts most regular, retail customers. That, however, does not mean the cloud computing division is not important. AWS has become a huge growth area for the company and is changing how people -- businesses specifically -- use computers. So it's big that Amazon will begin reporting financial results for the division on its next quarterly earnings report.
AWS has two key areas. The first is selling affordable, scalable hosting solutions for businesses. This is important as it has forced server prices down specifically for Microsoft's (NASDAQ:MSFT) rival service. That's good for business, and by extension good for consumers, but it's not as potentially revolutionary as the second area -- Amazon WorkSpaces, which lets companies hook their employees up to the cloud.
This is the part of AWS that could change how businesses use computers and reduce PC demand.
What is WorkSpaces?
WorkSpaces is a "managed desktop computing service in the cloud," according to the company. Essentially, the product allows the actual computing to be done on Amazon's Web servers. The machine the worker uses is little more than an Internet connectivity box. The retail giant explained it more fully on its website:
Amazon WorkSpaces allows customers to easily provision cloud-based desktops that allow end-users to access the documents, applications and resources they need with the device of their choice, including laptops, iPad, Kindle Fire, Android tablets, and zero clients. With a few clicks in the AWS Management Console, customers can provision a high-quality cloud desktop experience for any number of users at a cost that is highly competitive with traditional desktops and half the cost of most virtual desktop infrastructure (VDI) solutions.
Basically, any device with a screen and an Internet connection can access high-powered computing. This has serious implications in the business world, where it could make it possible for companies to spend less on high-powered computer devices while still having that power available to them on a scalable basis.
WorkSpaces also has implications for the education market since schools would be able to buy cheap terminals -- like Android tablets or Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Chromebooks -- and have access to programs those machines would not be capable of running on their own.
Amazon has now made this future closer to reality by introducing the AWS Marketplace for Desktop Apps and Amazon WorkSpaces Application Manager.
How does this change things?
By launching the Marketplace, Amazon has provided a software store for people using WorkSpaces' virtual computers. The store lets customers buy the apps they need to make their cloud computing environment the most productive. The company explained in a press release:
Amazon WorkSpaces's virtual desktop customers can access the AWS Marketplace for Desktop Apps, choose from a broad selection of more than 100 applications in eleven categories, and pay by the month for the applications they use.
The company has also released the WorkSpaces Application Manager, a tool for managing the apps and software:
To simplify deployment of these desktop applications, AWS also announced Amazon WorkSpaces Application Manager (Amazon WAM), a new service that packages and delivers applications to Amazon WorkSpaces so that they run as if they are natively installed, but are centrally controlled by IT administrators for simplified maintenance and auditability.
In doing this, Amazon has made it very easy for companies to use WorkSpaces and trade in their high-powered PCs for dumb terminals. It's ultimately a cheaper solution that gives businesses the added bonus of having workers on machines that do exactly what the employee needs to get the job done and nothing more.
Amazon is part of a trend
Moving computing into the cloud and off of individual computers has been a growing trend. That is the way Chromebooks -- which have thrived specifically in the education market -- operate. It's also key to how the low-cost Windows machines that were sold last holiday season are kept inexpensive. Those computers use on-board software, but they take advantage of cloud storage to allow for computers with much less on-board memory.
Even before Amazon made these moves, PC sales had been declining. Worldwide PC shipments totaled 71.7 million units in the first quarter of 2015, a 5.2% decline from the first quarter of 2014, according to Gartner.
It's anecdotal, and AWS is certainly not the only factor, but the types of computers used by businesses led the decline. "Desk-based PC shipments declined rapidly, with business desk-based PCs being affected the most," according to the research firm.
Amazon may also be coming along at the right time as using dumb terminals and a cloud-based solution actually makes it not necessary to upgrade older computers, which companies will be pressured to do with the upcoming launch of Windows 10.
Selling enterprise customers on cloud-based solutions may take time and it's possible it may not happen, but it's also possible that it will take over. AWS and competing services offer cost control and flexibility. That's good for businesses.
It may be a little early to predict the death of the PC, but AWS makes any dumb terminal a high-powered machine. That's very good for large-scale enterprises, and perhaps a little frightening for traditional PC makers.
Daniel Kline owns shares of Microsoft. His company uses AWS for hosting a bunch of websites. The Motley Fool recommends Amazon.com, Gartner, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), and Google (C shares). 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.