NEW YORK (TheStreet) -- Google's (GOOG) next $20 billion business may take aim at Jeff Bezos-led Amazon (AMZN - Get Report) and not Apple (AAPL), as the company ramps up various initiatives, the latest being Google Computer Engine. Google Computer Engine may be a $20 billion business by the end of the decade, competing directly against Amazon Web Service for the hold of the infrastructure-as-a-service (IaaS) market.
Bernstein Research analyst Carlos Kirjner said in a Friday client note he believes Amazon's (AWS) will reach revenue of at least $20 billion by the end of the decade and that Google's Computer Engine may end the decade with an equally profitable and large cloud infrastructure business. "Together, Amazon and Google's cloud business could very well exceed $40 billion in revenues by the end of the decade, and perhaps much more," Kirjner wrote.
The way Kirjner sees it there are more than a handful of players trying to win the infrastructure-as-a-service (IaaS) market, but only two or three companies will ultimately succeed. Amazon, with AWS, has already proven to be a credible player. Google is making quick strides in the Iaas market that Kirjner believes will succeed. Possibly, Microsoft (MSFT) will also succeed, according to the analyst.
About Verizon (VZ), AT&T (T), VMWare (VMW), Hewlett-Packard (HPQ), Centurylink (CTL), BT and Cisco's (CSCO) efforts to enter IaaS, Kirjner said "we have very little doubt that they do not have the right computer science and engineering skills and assets to compete with Amazon, Google, and Microsoft."Currently, the analyst estimates AWS's 2013 revenues were in excess of $3 billion, growing more than 85% from 2012 levels, while Google Compute Engine earned $100 million or less in revenue. "Microsoft, probably booked a few hundred millions in infrastructure-as-a-service revenues in 2013 as part of Azure, certainly a figure that is much closer to Google Compute Engine's revenues than to AWS's," Kirjner wrote. Those figures suggest AWS may have a 70%-to-75% market share in the IaaS market. Even if the competition has a 25% market share, Kirjner believes in-process projects at the likes of Amazon, Google and Microsoft may make the gap even larger. (WMT) and Target (TGT) get the most press, it is a brewing combination between the two burgeoning cloud computing powerhouses where a next fight in Silicon Valley may quietly take hold. -- Written by Antoine Gara in New York Follow @AntoineGara