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Amazon.com, Inc. (AMZN) Cloud Services Threaten Oracle, Teradata Corporation

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Amazon’s AWS highly integrated services like RedShift and TAWS pose danger to competition

With incremental new services and products, Amazon.com, Inc.’s (NASDAQ:AMZN) cloud service arm, Amazon Web Services (AWS), is rapidly growing and taking more share in the market. CLSA recently attended AWS Summit, which likely took place at Javits Center in New York City, NY on August 10 and 11.

AWS Global Summit Series 2016 includes event across the globe in which new and old customers are educated regarding AWS platform and provided “deep technical content.” Following the conference, Ed Maguire, analyst at CLSA, said that Amazon’s cloud competition threatens its closest rivals, RightNow Cloud Service of Oracle Corporation (NYSE:ORCL) and Teradata Corporation (NYSE:TDC)

Mr. Maguire expects Amazon’s cloud services division to continue its rapid growth with its portfolio of highly integrated services. He highlighted that decisions of customers were supportive towards going “all-in” from the cloud service provider.

The research firm believes that AWS has stunned the analysts and the Street with its surprisingly strong performance, since the e-commerce giant started publishing its quarterly performance. Mr. Maguire was surprised by the overwhelming support for RedShift among partners and customers. He added that users appreciate the warehouse service’s costs, opex payment model, performance and scalability.

“There are a number of large users including GE, with the largest implementation a multi petabyte Chinese carrier,” he noted.

A partner shared a projection of 150,000 customers, implying penetration rate of about 15% within the customer base, according to CLSA. Since AWS started offering the database migrations’ final destination, its products are greatly admired by customers.

The investment firm highlighted another AWS product, TAWS, which magnetized users looking for cheap EC2 computing and S3 storage. Given these advantages, analysts expect large number of customers shifting from Oracle RDS to Amazon’s RedShift or Aurora. He also sees users shifting from Teradata, signaling a red flag for competition.

CLSA maintained bullish Outperform rating with $890 price target on Amazon stock, representing potential upside of 15.20%. On Friday, Amazon shares edged up 0.17% and closed the market at $772.56.

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