Amazon's Cloud Business Gets a New Focus
As Amazon.com (AMZN) - Get Report continues to grow its cloud computing business, Amazon Web Services' next phase of developmentwill likely center around data services.
Seattle-based Amazon finished its two-day Amazon Web Services Summit in Santa Clara, Calif. on Wednesday.
While no major product or service developments were announced, the e-commerce giant suggested that AWS would continue to broaden its data services offerings, including collection, storage and analysis, analysts said.
Shares of Amazon are up about 0.2% Thursday afternoon to $743.78.
"It remains clear to us that Amazon Web Services continues to capitalize on the multi-year secular shift to cloud platforms," wrote Pacific Crest Securities analysts in a Wednesday note.
AWS has particularly gained traction among the startup community, counting Slack, Airbnb, Lyft and Pinterest among its customers. But the company is also aggressively going after larger enterprises such as Johnson & Johnson (JNJ) - Get Report and General Electric (GE) - Get Report that are also migrating to the cloud.
"To sustain high growth as the business scales north of $10 billion, these large enterprises will remain a key element," the Pacific Crest analysts wrote.
Amazon is seen as the leader of the pack in cloud computing, ahead of Alphabet (GOOGL) - Get Report and Microsoft (MSFT) - Get Report . While the latter two have hinted at focusing on artificial intelligence and machine learning to differentiate themselves from Amazon, AWS continues to bet on data services offerings.
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"Data analysis and AI will likely remain a key investment area among the three largest cloud platforms that are battling for mindshare," they added.
Over the years, AWS has emerged as the crown jewel of Amazon as companies shift toward the cloud, where remote servers on the Internet are used to store information. The unit has been generating explosive growth and continues to expand quickly despite its large size.
Amazon, which created the cloud business model in 2006, continues to aggressively innovate and invest in the platform to stay ahead of its rivals. Its plan to ramp up data services highlights its mindset.
Matt Wood, general manager of Amazon Web Services' product strategy, outlined what AWS calls its "data flywheel" model, noted RBC Capital Markets analyst Mark Mahaney in a Thursday note.
Data flywheel refers to the notion of applications collecting more users, who then create more data. More data allows organizations to get better insights, which organizations then use to build better products. Better products lead to more users, and the cycle repeats.
"To drive this flywheel faster, an organization needs an end-to-end analytical view of its business -- historical, real-time and predictive," Mahaney added. "AWS provides its customers with the complete toolset to drive this insight."