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HindustanTimes Mon,21 Apr 2014

Amazon cloud looms over IBM

Reuters  San Francisco, July 22, 2013
First Published: 23:18 IST(22/7/2013) | Last Updated: 03:33 IST(23/7/2013)

After years of being dismissed as a supplier of online computer services to startups and small businesses, Amazon Web Services (AWS) beat out IBM this year to snag a $600 million contract with the Central Intelligence Agency (CIA), America’s top spy agency.

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IBM has successfully appealed its loss in the contest, stalling it for now. But the episode highlights how Amazon is evolving from an online retailer into a competitive provider of information technology and services to big companies, and government bodies.

That has helped push Amazon shares to a new record of $309.39 ahead of the company’s second-quarter results due on Thursday.

AWS generates at least $2 billion a year in revenue now from a total pie of more than $60 billion, according to analysts who expect that to quintuple to more than $10 billion in coming years, partly driven by higher government cloud spending.

Amazon has begun to build a portfolio of significant clients, including Samsung, Pfizer, the Public Broadcasting Service and NASA, the U.S. space agency.

That unexpected threat is rippling through the sector.

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