Please ensure Javascript is enabled for purposes of website accessibility

Amazon Is King of Cloud Computing

By Tim Beyers – Updated Apr 5, 2017 at 8:25PM

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

But Mr. Softy is organizing a coup. (NASDAQ:AMZN) is the king of cloud computing. Two very smart guys just said so: Bill Gurley of Benchmark Capital and Ray Ozzie of Microsoft (NASDAQ:MSFT).

Gurley I met live, at his office overlooking Stanford University, during an "innovation tour" of Silicon Valley with my Rule Breakers teammates. He had just bought shares of Amazon, explaining that the retailer can be a low-cost leader in cloud computing services.

Ozzie, Mr. Softy's chief software architect, is less a fan than an admiring rival. On Monday, he said that "all of us are going to be standing on [Amazon's] shoulders" in introducing Windows Azure, a cloud computing environment that CEO Steve Ballmer foreshadowed earlier this month.

The technical idea is intriguing. Windows Azure runs applications and resembles Amazon's Elastic Compute Cloud in that it's a massive cluster of processing horsepower made available via the Web. A "Fabric Controller" governs the environment -- parsing storage and CPU cycles, among other things -- in a manner that should seem familiar to those who follow VMware (NYSE:VMW).

But, even if it sounds like it, the Fabric Controller isn't Hyper-V, the single-server virtualization technology that competes with ESXi, a free product from VMware. The Fabric Controller will instead work on a massive scale, coordinating the cloud like Google's (NASDAQ:GOOG) algorithm coordinates a global network of servers to search queries. Or how Akamai's (NASDAQ:AKAM) algorithms deconstruct and then reassemble data to deliver it fast over the Web.

We're not likely to know all the details behind Windows Azure for weeks or even months. The service is still in the planning stage. And yet I sense the potential for a winner here. Why? It's disruptive technology.

Think about it. The twin promises of cloud computing are (a) cost savings and (b) platform freedom. Windows Azure could fulfill both while preserving the hard work developers have put into creating software for Windows, SQL Server, and other Microsoft technologies.

Call it a strategy for platform preservation. Or, if you're a cynic, a red herring. But whatever your pleasure, don't call it dumb. Any strategy that keeps existing customers paying is a good one -- especially in troubled times like these.

Get your clicks with related Foolishness:

Fool contributor Tim Beyers recently returned from a tour of Silicon Valley during which he visited more than a dozen established and emerging innovators. Care to learn more? Just tell us where to send you our updates. It's 100% free.

At the time of publication, Tim had stock and options positions in Akamai and Google, both of which, like VMware, are Rule Breakers recommendations. Amazon is a Stock Advisor selection. Microsoft is an Inside Value pick. Get access to all of Tim's Foolish writings here.

The Motley Fool's disclosure policy is king of the disclosure world.

Stock news, financial commentary, and your daily dose of Foolishness: Get plugged in to the The Motley Fool on Twitter!

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

Microsoft Corporation Stock Quote
Microsoft Corporation
$232.90 (-1.94%) $-4.60, Inc. Stock Quote, Inc.
$113.00 (-1.57%) $-1.80
Alphabet Inc. Stock Quote
Alphabet Inc.
$95.65 (-1.82%) $-1.77
VMware, Inc. Stock Quote
VMware, Inc.
$106.46 (-0.95%) $-1.02
Akamai Technologies, Inc. Stock Quote
Akamai Technologies, Inc.
$80.32 (-0.22%) $0.18

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

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.