When Amazon Web Services, also known as AWS was first announced, it was a massive point of excitement. After all, just about everything seems to be moving to the cloud these days, and Amazon was one of the first players on the scene. As a result, in just about the first year of operating the service, it became a $5 billion company by itself. However, more recently, there have been questions rising with regard to Amazon’s ability to maintain growth in the cloud computing industry. Today, we’ll talk about some of the factors that led to Amazon’s leadership in the industry, what’s changing, and what binary options traders should be watching for ahead.
How Amazon Became A Leader In Cloud Services
As mentioned above, Amazon Web Services quickly became a global leader in cloud computing services. Ultimately, there were a few things that helped the service take the lead position…
- Competition – Amazon got in the industry at ground level. Being so early to the game, there were no competitors with the strength to fight Amazon. As a result, it was incredibly easy for the company to take the larger role in the industry.
- Price – One big factor with Amazon Web Services is part of the overall Amazon business model… price. You see, the company built a name by offering products at incredibly low margins to bring in the masses, and while AWS does have good margins, the price of the services is low comparatively.
- Brand – Finally, through the years, Amazon has built a globally recognized brand. As a result of a strong brand, it was incredibly easy for the company to gain the trust of consumers, helping it to quickly build the AWS subsidiary into a stand alone giant!
What Is Changing
At the moment, analysts are expecting for the growth in Amazon Web Services to start to slow down. There’s one big reason for this. Ultimately, that reason is competition. You see, as mentioned above, when Amazon got into the cloud computing industry, there were really no big names to contend with. However, that’s quickly changing. Today, consumers have options, and those options come from big, trusted names. For example, Google Cloud and Microsoft Azure are likely to cut into Amazon Web Services’ growth. Ion fact, analysts at pacific crest recently reduced the price target on the stock from $905 to $895 with the following statement offered as the primary reason…
“AWS boasts a multiyear lead over Microsoft Azure and Google Cloud. However, heavy investments could increase the viability of these alternatives. After three years of outsized gains and tripling of profits, AWS’ growth could moderate this year and next…”
What Binary Options Traders Should Be Watching For Ahead
Moving forward, binary options traders should be keeping a close eye on Amazon as there will likely be several opportunities ahead. In particular, keep an eye out for any news associated with AWS as this is where the uncertainty lies at the moment. Any news surrounding the service will likely lead to movement in the value of the stock.
What Do You Think?
Where do you think Amazon is headed moving forward? Join the discussion in the comments below!