| It's a monopoly game with a power-law distribution. If you're not playing for first place, eventually Amazon's Zero margin business will subsume all of the smaller players. I articulated this point in a blog post for our site[0] in which I describe a phenomenon I call Bezos' Law. Essentially, the cost of cloud computing in general (currently driven by AWS) is cut in half roughly every 18 months. This is like Moore's law, except it's driven by market conditions instead of technical innovation. The endgame of Bezos' Law is 0, but everyone else will get out well before then (once it ceases being a profitable business). Since AWS will be the largest player in cloud infrastructure, it will eventually shift from being a profit center for other organizations and will become a cost center. After that it becomes a matter of time. IMHO, this is also the plan for Amazon's Commerce business long-term and is why the market provides them with such a ridiculous P/E ratio. So does Azure provide competition? Maybe. I think most of the people on Azure are on there because Microsoft is comping the time (pure conjecture based on the kinds of numbers they put forward). The endgame, from my perspective, is that everyone gets choked out by Amazon with time unless someone upends them, and that's why I think the position of "providing competition" isn't going to materially move the needle for a company like Microsoft. Not now and not long term. They've called Azure a billion dollar business, but only when counting comped hours. Lots of conjecture, I definitely put myself out there for some flaming, but that's how you learn whether your positions can stand on their own merits. Let me know what your thoughts are :). To be clear, in spite of everything I've said today, I am long-term bullish on Microsoft. I just think Ballmer isn't making smart decisions right now. [0]http://blog.2600hz.com/post/55614383443/bezos-law |