Amazon cloud looms over IBM

  • Reuters, San Francisco
  • |
  • Updated: Jul 23, 2013 03:33 IST

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.

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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