Please ensure Javascript is enabled for purposes of website accessibility

Amazon Seeds Its Clouds

By Anders Bylund - Updated Apr 5, 2017 at 8:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It will start raining cash in a little while.

The flower said "I wish I was a tree"
The tree said "I wish that I could be
A different kind of tree"
The cat wished that it was a bee
 -- From Tree Hugger by Antsy Pants

I think that Amazon.com (NASDAQ:AMZN) really wants to be Google (NASDAQ:GOOG) and IBM (NYSE:IBM), rolled into one.

Change is good and Amazon's Web Services platform is getting better by leaps and bounds. The latest new trick in the bag is the opportunity to share public databases between applications cooked up by different people or companies. For starters, the service comes loaded with U.S. Census data from 1980 onwards, maps of the human genome, and chemistry information from Indiana University. Developers can use these massive information troves for free, which will be a tremendous boon to students, researchers, and businesses everywhere.

And it's also exactly the kind of thing you might expect Google to release first, whose mission is to "organize the world's information and make it universally accessible and useful." But that's precisely what Amazon is doing here, with a computing infrastructure service behind it that has Big Blue playing catch-up. We're talking about a huge corporate vision here.

This is why I think that the likes of IBM, Microsoft (NASDAQ:MSFT), and Google have more to fear from Amazon than its traditional e-retailing rivals like Barnes & Noble (NYSE:BKS) or Overstock.com (NASDAQ:OSTK) do. Sure, the e-commerce side of Amazon's business is chugging along just fine, but it's just another retailer in a massive sea of competitors. When it comes to cloud computing, Amazon is proving to be a first-mover that keeps adding compelling features. I'm reminded of virtualization specialist VMware (NYSE:VMW) more than anything else.

Right now, the Web services are a trivial part of Amazon's business. The company doesn't report it as a separate segment, and rarely even mentions these products in its quarterly earnings calls. But I think this will change, and fast. The low-cost, high-efficiency nature of this platform makes it ideal for disaster-stricken businesses looking to run their IT infrastructure on the cheap, so Amazon's timing couldn't be better. I fully expect these products to start producing meaningful amounts of revenue in the next year or two.

Tut-tut, it looks like rain.

Further Foolishness:

Microsoft is a Motley Fool Inside Value pick. VMware and Google are Motley Fool Rule Breakers selections. Amazon.com is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You may recognize that song lyric from hit movie "Juno." You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$142.73 (3.55%) $4.90
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$288.01 (2.02%) $5.71
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$119.97 (2.86%) $3.34
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$131.10 (1.26%) $1.63
Barnes & Noble, Inc. Stock Quote
Barnes & Noble, Inc.
BKS
Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$30.44 (5.62%) $1.62
VMware, Inc. Stock Quote
VMware, Inc.
VMW
$119.48 (2.50%) $2.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.