Amazon’s apps face uphill battle in the cloud vs. Microsoft and Google

AWS's chief IaaS competitors have a distinct advantage in collaboration apps

Amazon Web Services may have a market-share lead in the IaaS cloud, but in the past year the company has begun to offer a series of applications that run on top of its cloud that have been produced by AWS.

Examples of these apps include Workspaces, the company’s virtual desktop infrastructure and WorkMail – a managed email system.

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Meaghan McGrath an analyst at Technology Business Research Inc. say these moves suggest that AWS is interested in competing not just on the IaaS stack where its virtual machine, storage and database offerings are established entities, but with higher-level application services such as productivity tools, virtual desktops and email systems. That could be a tough fight for AWS to win though.

“TBR believes that this space is relatively saturated with sticky products such as Microsoft Office and Google Apps, and AWS will be challenged to gain meaningful market share in the segment,” McGrath writes in a recent note about AWS. “We expect that AWS will drive incremental revenue in existing accounts with its enterprise applications suite, but net-new customer wins led by this suite will likely remain scarce.”

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AWS is used to competing in the cloud market from a leading position. But for one of the first times, it’s actually got an uphill climb compared to Google and Microsoft as it rolls out its own applications in the enterprise market, McGrath believes.

AWS is trying to offer all the services business would need from its cloud, including collaboration tools. For AWS, it’s not a make or break move though. The company is a leading vendor for IaaS. Synergy Research Group estimates that AWS’s revenues are larger than it’s next four competitors, combined (that would include Google, Microsoft, Salesforce and IBM).

AWS has other advantages too beyond just IaaS: its cloud marketplace is the cream of the crop in the cloud. (Read more about our analysis of SaaS marketplaces from Amazon, Microsoft and Google here). The AWS Marketplace has a strong network of third-party partners who offer services on top of AWS’s IaaS and integrate natively with other AWS components. Microsoft and Google are attempting to build up their own Marketplaces, but AWS has the lead in this category.

But in terms of AWS’s own in-house apps, as TBR notes, that will be an uphill battle for AWS.

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