NEW YORK (TheStreet) -- Amazon (AMZN) is often talked about for its massive presence in online shopping, and rightly so. The company accounted for one-third of online shopping revenue as of mid-2012 according to the Institute for Local Self-Reliance, to the tune of $48.08 billion in revenue. Amazon holds even more of the market when looking at online book sales -- it has 75% of online book sales and 61% of e-book sales.
But there is more to Amazon's pie than just online shopping.
A large, but often forgotten, part of Amazon's business is the web services it provides to big companies. According to a December article in the New York Times, Amazon's web service is responsible for Netflix's (NFLX) streaming services, as well as popular websites such as Pinterest and Instagram. Google (GOOG) launched a similar service in June and Microsoft (MSFT) is also in the game with its Windows Azure.
Now, VMware (VMW) is slated to be the newest addition to the line-up.VMware popped more than 8% Wednesday after the announcement was made, pushing its share price from $75.29 on Tuesday to $81.37 at market close. The company is currently trading on a 52-week range of $70.05 to $118.79, and more than 47 times its earnings. But analysts are saying that VMware will grow an average of 21% per annum for the next five years, compared to forecasted industry growth of just under 19% for the same period. Leaving analysts alone, the news is more than enough reason for investors to be encouraged. To put it plainly, VMware could really have a shot. As Forrester writes, "VMware hired the former president for Savvis Cloud, Bill Fathers, to run this new offering and said it was a top three initiative for the company and thus would be getting, 'the level of investment appropriate to that priority and to capitalize on a $14B market opportunity,' according to Matthew Lodge, VP of Cloud Services Product Marketing and Management for VMware." In other words, the staff is there as well as the investment. Few details are available right now -- VMware's new product won't be unveiled until next quarter -- but what is known is that the new cloud service will be a hybrid. Leaving jargon aside, it is basically a public cloud that has an API aspect as well -- a feature that could preclude it from having an outage like Amazon's web service did in December which put Netflix, Instagram and others out of commission for hours.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV