Amazon Web Services is the long-standing market leader in cloud computing, but it can’t rest on its laurels: Microsoft is becoming an increasingly strong competitor.
Mergers and acquisitions are a popular strategy within the cloud market, where it’s common to see “public cloud providers scooping up some of these smaller players,” said Sid Nag, a vice president focused on cloud at Gartner.
He and other analysts named eight companies that Selipsky could buy.
Four are collaboration and communication related firms, an indication of AWS’s interest in combating Microsoft’s productivity software dominance.
AWS recently bought the encrypted messaging app Wickr, which analysts suggested was a sign it “felt left out” that it didn’t have a productivity suite in the vein of Microsoft 365 to sell to government customers. Indeed, software-as-a-service (SaaS) is an area some analysts have long considered unexploited territory for AWS and it’s becoming apparent the company feels that way too: Amazon has discussed forming a ‘Rebel Alliance’ with companies like
and Dropbox to compete with Microsoft and the AWS business-apps team frequently discusses how to match Microsoft 365.
IDC research director Larry Carvalho said that AWS tends to focus on getting other companies to build on top of its platform — including Salesforce, both customer and partner to AWS — but that it does already have a SaaS headstart based on the strength of its retail platform: “If you add e-commerce, they are into SaaS, they are into search, they are into recommendations, they are into advertising,” he said. “So they have some entry into that market without having to buy anybody.”
The other four acquisition targets are small firms working on edge computing, the industry term for putting processing power closer to devices or locations for better performance, which is useful for a wide range of applications including self-driving cars, factory equipment, and smart-home electronics.
Dan Ives, managing director at Wedbush Securities, said that edge continues to be a key place for AWS to innovate and even buy.
“As the cloud moves closer to the end point, it becomes more and more important for AWS to extend its tentacles and infrastructure to the edge and beyond,” he told Insider. “There’s a lot of companies that play there, but I would not be shocked to see them go after some acquisitions on that front.”
Beyond edge computing, analysts also see opportunities for Selipsky to make buys in areas like vertical cloud solutions and cybersecurity, if only to beef up what AWS already offers.
Here are eight companies experts say that AWS could acquire — and four more categories where it could make smart buys:
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