The last week of July witnessed Chinese internet firm Alibaba investing US$1 billion in its cloud computing division Aliyun. It had recently expressed a wish to beat Amazon in the cloud services business. Though Alibaba has a long road to tread, it is not the only competitor that Amazon has. Should the latter be worried about its future in the cloud services market.
Latest Developments in Cloud Computing Market: Security Emerges as Key Issue
Amazon Web Services has been a revenue driver for Amazon in the last two quarters. The e-commerce giant’s cloud business has led it to earn handsome quarterly profits. However, its arch rivals in the cloud services market have recently made some smart moves to bolster their businesses.
- Microsoft plans to buy Israeli cloud-security firm Adallom: If Microsoft buys Adallom Inc. for a whopping US$320 million, it would ensure the expansion of the technology giant’s cyber-security-focused operations in Israel. Adallom offers services aimed to ensure the security of the cloud-based applications such as Google’s Google Apps, Microsoft’s Office 365, and the applications developed by Service Now Inc., and Salesforce.com Inc. By monitoring the use of cloud application by individual employees, Adallom’s services point out the anomalies as possible security breaches. The Israeli firm has an envious list of clients that includes LinkedIn, NetFlix, and SAP SE.
- IBM gains FedRAMP approval for cloud services: IBM’s cloud-based MaaS360 is the first enterprise mobility management solution to meet all the stringent security requirements of the Federal Risk and Authorization Management Program (FedRAMP) Joint Authorization Board. MaaS360 offers advanced security by allowing organizations to monitor and control smartphones, tablets, PCS, and other personally-owned devices.
- Google Offers ‘Encryption Keys’: To address the security issue, Google Compute Engine is offering a “bring your own encryption keys” feature in trial form. Though GCE already supports the AES-256-bit encryption, the current feature will let users control the keys to access data. Google has mentioned that no one would be able to access the data without obtaining access to the encryption keys.
Interestingly, Amazon Web Services had already raised the bar last year when it announced BYO encryption keys for its S3 storage service. Also, the company offers Cloud HSM to allow customers to manage their own keys.
How Does Amazon Web Services Manage to Retain Top Position in Cloud Services Market?
Amid the price war between the top cloud service providers, aggressive pricing has been the key word for Amazon to manage its stronghold in the cloud services market. Recently, Amazon Web Services massively slashed prices by 28% – 51% for its various services. Though this has made investors worry about the company’s long-term profitability, it has helped Amazon register revenue worth US$1.57 billion from its cloud services arm in the first quarter of this year.
Aggressive pricing has also helped Amazon to expand its clientele across different geographical regions. Amazon Web Services has recently opened its office in Johannesburg to tap the expanding customer base in South Africa. Adcorp and Medscheme are some of the established clients of Amazon’s cloud services in the region.
What Does the Future Hold for Amazon’s Cloud Services?
Last week of August saw Amazon and Microsoft winning a huge contract with the Federal Aviation Administration (FAA), led by IT consultant CSC. The FAA is in the process of shrinking its data centers and moving data to both Amazon’s cloud Amazon Web Services (AWS) and Microsoft’s cloud, Azure. This contract might lead to new opportunities for Amazon to offer its cloud services to other government agencies.
However, a growing number of players in the cloud services market will threaten the top position enjoyed by Amazon Web Services in the market so far. Further price cuts will definitely affect the company’s profitability goals in the future. Also, potential customers are increasingly becoming reluctant to outsource their operations to cloud service providers due to security threats. Under these circumstances, Amazon has to come up with innovations and strategies to protect its stronghold in the cloud services market.