In the small business market, Amazon's cloud business is crushing top rivals like Microsoft and Google.
Amazon Cloud Business' Success
According to Business Insider, Amazon Web Services has become now a massive business with annual revenue of $10 billion. Amazon's cloud business has customers in all sectors, including the highly-regulated financial and public sectors. But according to a new survey published by Pacific Crest, Amazon Web Services is most successful in the small and medium-sized cloud app service market.
Instead of building their own data centers, Amazon's cloud business offers smaller startups an easy option to rent cloud servers. This is significantly helping to reduce the cost of starting a new service.
Among 300 companies surveyed with a 2015 median revenue of $5 million, 50 percent of the respondents have Amazon Web Services as their choice of cloud service provider. That compares to Salesforce's 2 percent share and Microsoft's 4 percent share this year. Around 10 percent of the respondents have chosen the "Other Third Party" category including Google's cloud service.
Amazon's cloud business accounted for only 40 percent of the market in last year's survey. Market analysts expect that in the next three years Amazon Web Services will further widen its lead to 64 percent. One of the ways of increasing its small business market share is through acquisitions of other specialized cloud service companies.
Amazon Web Services Acquisition Strategy
According to Tech Target, Amazon Web Services' acquisitions of Cloud 9, Elemental Technologies and NICE show a pattern of purchases oriented toward small, service-focused companies. Each acquisition in the cloud business field aims at tactical but less expensive companies to fill up any gaps Amazon may have in the market. And its strategy works, now there are not many gaps left.
Amazon acquired Elemental Technologies in September of 2015, for $500 million. Amazon Web Services used the back-end mobile video service to strengthen its own cloud infrastructure services. NICE was purchased in February 2016. The Italian software as a service company is specialized in developing products to help customers centralize visualization workloads and high-performance computing.
Market analysts predict that Amazon Web Services will continue in the near future to expand its portfolio through various acquisitions. These tactical acquisitions are helping the company to build most of the cloud services offered. For instance, Amazon Web Services acquired San Francisco-based startup Cloud 9 that provides an integrated development environment (IDE) as a collaboration platform for mobile and web developers.
Cloud 9's technology will likely be integrated in Amazon Web Services into its infrastructure as a service offering without replacing or adding any other major services. This demonstrates that Amazon Web Services' purchase strategy aims to add value to its customers through small changes. These are small purchases and this strategy contrasts with that of IBM, Google, Microsoft, and Oracle, all of them choosing larger players for their purchases.
Amazon Web Services will likely continue to purchase various specialized companies that can help it move it into underutilized or new markets. Among potential purchase targets are included IoT startups, cloud management companies, DevOps, and developer productivity companies,
