Flood Rivals could exploit the Amazon cloud

   AMZN -9.65% has fought two major rivals in the world of cloud computing. But the battle is showing signs of becoming a free-for-all that threatens profitability for commercial purposes.

Large and small startups telecom has carved or service that allows companies to rent computing cycles operate servers and grow their own data centers. Increased competition comes amid a price war between Amazon continue in business, Google Inc. -0.82% GOOGL and Microsoft Corp. MSFT + 0.23%

They emphasize that stands on Thursday when the online retailer reported a wider loss for the second quarter. Some of the reasons: Amazon Web Services, or AWS, recently cut prices by between 28% and 51% for a range of services for profit in AWS and similar businesses slowed to 38% from 60% in the first quarter.

Developments indicate the possibility that profit margins in the Amazon Cloud Drive is believed to be much higher than the retail online long term faces a growing concern among investors squeeze on profitability .

Besides the loss of the second quarter, estimates Amazon's red ink in the current quarter. Its share price fell nearly 10% on Friday to $ 324.01 from $ 34.60.

The disclosure adds AWS expand the perception that competition, and new strategies to cope with the task of computing business Amazon can reduce the dominant shareholder in business management.

"For the first time, people do not think Amazon has a market all sewn" said Sinclair Schuller, CEO of Apprenda Inc., which provides software and services to help modernize the computing resources of the company.

Meanwhile, Ocean Inc, Joyent Inc. and Contegix LLC digital startups find success in niche markets, emphasizing innovation in areas such as hardware or server software.

"Amazon offers everything under the sun," said Ben Uretsky, CEO DigitalOcean, with 150,000 active and profitable customers. "We are not."

Eric Singleton, head of the information office of Chico FAS Inc., CHS -1.72% said retailers have displaced Contegix AWS for an application that allows store associates to find information about customers of a tablet. Contegix allow Chico to pick and choose from among the servers to run the applications.

"We need faster performance and more control over the settings of our environment," said Mr. Singleton, though he says he did not ask if the AWS can provide that flexibility.

Challenge other powerful executives, industry insiders say, are derived from their own potential customers. Many companies, especially banks and others with a need for high security data is not inclined to outsource the operation.

So many uses cloud technology, new styles to keep all or at least part of the local computing, hybrid cloud model mentioned. Some companies that offer cloud services, including Microsoft, VMware and Joyent-also provides software to help companies who want to save some computational operations in their own place.

AWS believes "that every company that continues to computing facilities is a walk of dinosaurs," said Bryan Cantrill, Joyent CTO. "I just do not believe we could."

"We have a lot of great companies that perform with your existing AWS (property) IT, and we have the tools and services to help customers succeed as they grow use AWS," said Ariel Kelman, vice president of AWS marketing.

And tight does not mean outsourcing will not see growth. Amazon does not disclose revenues or profits of AWS operations, but analysts generally expect the business to generate between $ 5000000000 and 6000000000 dollars in annual revenue in the next year.

Tom Szkutak, Amazon's CFO, said Thursday that AWS is "doing very well" and consumption in the second quarter rose 90%, but does not explain how it is measured.

Researcher Gartner Inc. estimates about $ 12600000000 will be spent this year on a pay-as-you go computing power of Amazon and others. That's a jump of 36% from 2013 levels.

"Most companies are not looking at the sky as if," said Tom Kershaw, director of cloud platform of Google. "They see it as the moment."

Furthermore, Gartner estimated less than 1% of the approximately $ 2,000,000,000,000 that the company is expected to go this year on computers, software and other technology owned internally, does not include telecommunications services.

Manage internal server can save money in certain cases. Industry executives working with AWS and others say that as a rule of thumb, companies that spend at least $ 1 million per month to have the computational outsourcing better than renting.

But in other cases, customers see the benefits of the cloud. Joe Simon, chief technology officer of Conde Nast, the publisher said that recently moved through the data center and 40% of older data centers are running is saved.

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