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Amazon Gains as Web Confab Trumpets Innovation

Stocks in this article: AMZN

NEW YORK (TheStreet) -- Amazon (AMZN) was gaining Thursday as its three-day Web Services conference bolstered investor outlook for the all-purpose online retailer's cloud services and product innovation.

Shares were adding 3.1% to $367.31 in afternoon trading as investors embraced Amazon Kinesis, a fully-managed service for real-time processing of high-volume, streaming data from which a customer can store and process terabytes of data from thousands of sources.

The upbeat tone of the conference was set Wednesday when Andy Jassy, senior vice president of Amazon Web Services, voiced CEO Jeffrey Bezos's prediction that the company's newest projects will eventually surpass Amazon's giant retail business.

"It is very possible that AWS could be the biggest business at Amazon," said Jassy.

During his keynote address, Jassy revealed a number of key product rollouts. Chief among them is AWS' expansion into the desktop virtualization market with Workspaces, which offers secure, cloud-based access to corporate documents and applications via devices ranging from laptops to tablets.

The service reduces the hassle of upfront and ongoing costs to less than 50% of the expenses associated with traditional desktop virtualization infrastructure solutions. Jassy also unveiled AppStream, a high definition, cloud-based applications streaming product; and CloudTrail, a security and compliance-boosting API call log.

As the conference progresses, UBS equity research analyst Eric Sheridan is commenting that his revenue forecast, though already optimistic, may still prove to be conservative when factoring in the new product announcements from the conference, especially pertaining to desktop virtualization.

So far, he's been estimating that AWS' contribution to Amazon's revenue will grow to $8.2 billion by 2017 from about $3 billion in 2013 and approximately $2 billion in 2012. His modeling takes into account in new product and service introductions, aggressive hiring and continuous price cuts. Sheridan says that AWS has made 38 price cuts in the last few years; 235 feature updates year to date compared with 159 in 2012; and now has numerous new, high profile security certifications. Overall, says Sheridan, AWS Trusted Advisor program has been able to put forth 700,000 recommendations to date, amounting to $140 million in annual customer savings.

The re:Invent 2013 developer conference is taking place in Las Vegas and ends on Nov. 15.

--Written by Andrea Tse in New York

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