Amazon Locks Up Data With Cloud VPN

SEATTLE, Wash. ( TheStreet) -- With interest in cloud computing growing, Internet giant Amazon ( AMZN) is attempting to make the technology more secure by offering VPN-based access to its services.

Cloud services, which offer compute power or data storage via the Internet, have become one of the hottest parts of the tech sector, with companies such as Amazon, Microsoft ( MSFT) and IBM ( IBM) all pushing the technology as a way for firms to avoid the upfront costs of hardware and software.

There are, however, some question marks still hanging over the cloud concept. Security and loss of data control, for example, are often cited as the biggest cloud issues.

Amazon claims to have the answer to these concerns, with its Virtual Private Cloud (VPC) offering. By using a Virtual Private Network (VPN) to link users to the company's cloud offerings, the Seattle-based firm says that it can offer a secure bridge to customers' data.

Initially offered for Amazon's EC2 cloud computing offering, Amazon will eventually extend VPC to other Web services such as its S3 storage cloud.

"VPC shows that Amazon wants to dominate cloud infrastructure services, not only for Web-facing applications and IT services for start-ups, but also for enterprise cloud computing," wrote Ezra Gottheil, an analyst at TBR, in a note released Wednesday. "This move is an imminent threat to IT vendors currently building up cloud services portfolios as rapidly as they can."

The VPN-based cloud, however, may also provide a boost to Amazon's partners such as BMC ( BMC) and CA ( CA), whose systems management software can manage applications in the cloud. VPN giant Citrix ( CTXS) has also thrown its weight behind VPC, clearly aiming to exploit users' growing demand for cloud services.

More than 80% of large enterprise IT managers are at least in the trial stage for cloud computing , according to the results of a recent survey conducted by Applied Research West. The study of 250 companies, which was commissioned by F5 Networks ( FFIV), found that 66% of respondents had a dedicated budget for cloud computing.

It is not clear at this stage, however, whether Amazon will use its secure cloud to tap into Obama's health care plan, which provides more than $20 billion in stimulus money for electronic medical records.

Although companies like McKesson ( MCK), IBM, and Cerner ( CERN) are expected to play a part in building physical records systems, some firms are also touting Internet-based records. Search giant Google ( GOOG), for example, already offers its Google Health service to store individuals' data in the cloud, and Microsoft and Salesforce.com ( CRM) have already made moves into Web-based medical records.

Amazon has not yet responded to TheStreet's request for additional information on its VPC plans, although the online retailer clearly sees new sales opportunities in the cloud.

Amazon enjoyed a revenue hike when it released its second-quarter results, but the performance of its cloud offerings remains shrouded in mystery.

The firm did not break out specific numbers for Web services such as its EC2 and S3 during its recent second-quarter conference call, saying only that this part of the company's business is growing "very nicely."

Despite its cloud bluster, shares of Amazon slipped 61 cents, or 0.72%, to $83.58 Wednesday, mirroring the broader dip in tech stocks that saw the Nasdaq fall 0.26%.

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