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Amazon.com, Inc. (AMZN) AWS competition gets heated: Analysts cuts PT on downside potential

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Amazon.com web service might lose important clients given the current price reductions by Google

Amazon.com (NASDAQ: AMZN) web service platform’s leadership in the cloud sector is now under jeopardy as the competition has become significantly greater. Three of the biggest names in technology industry, namely Google (NASDAQ: GOOGL), AMZN and Microsoft (NASDAQ: MSFT), are now engaged in a scuffle over market share in the cloud sector.

Amazon Web Services is likely to react to recent price reductions in Google cloud packages. Analyst Jason Helfstein at Oppenheimer expects some price reductions and loss of market share in the process and has reviewed his estimates to reflect for such. He believes that the AWS will now reduce package prices by about 10% instead of previously estimated 5% following the announcements made by Google in a recent event relating to its Cloud platform.

In other news Google announced partnership with Cloudamize, a cloud analytics tool that provides recommendations for optimal Google cloud configurations for your business, eliminating the need for any manual planning. This could be critical to AWS given the complexity of cloud migration planning and will definitely shave some potential markets share off AWS.

As it stands, AWS did not feel the need to lower prices in the year 2015, given its features and quality of service being quite ahead of the competition. Although this is because of future or current channel conflicts the client losses in the form of Dropbox, Apple and Spotify are likely to drive price cuts in the current year. The margins from e-commerce market are, however, expected to grow.

The analyst maintained an Outperform rating but lowered the price target to $660 from a prior $700. General analyst opinion has a total of 45 ratings out of which 26 are Buy, 14 are strong Buy and only five are Hold. The stock is currently traded at $547 in the premarket hours and closed at $553.98 yesterday.

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