E-commerce giant Amazon.com Inc. (AMZN) recently launched Amazon Workmail, its new e-mail and calendar service for businesses, in a bid to establish itself in the corporate technology market currently dominated by behemoths Microsoft (MSFT) and Google (GOOGL).
WorkMail would be pitted against Microsoft’s Outlook and Google’s Apps for Work. The service has been developed by its cloud computing division, Amazon Web Services (AWS), through which Amazon also offers services like Zocalo, a file-storage service, and databases like Amazon Aurora.
The move is the latest effort by Amazon to attract corporate clients. It intends to encourage its enterprise customers to shift more of their office work to AWS. WorkMail is an effort to persuade customers to stay within Amazon’s ecosystem as they use and exchange data, some of which they have already stored on AWS servers. It will also integrate the recently released WorkDocs, a service that lets AWS users store and share files.
The WorkMail service is also said to provide better encryption services and gives users better control over their stored data.
Businesses have grown more cautious of the U.S. government’s data-mining following Edward Snowden’s revelation of NSA’s global Internet surveillance program PRISM. Per the program, the agency collects user data of Internet companies like Google, Facebook (FB), Apple (AAPL) and Microsoft. As part of this operation, they can keep online activities under surveillance to determine any threat to national security
Companies have been taking adequate steps to prevent the tapping of user data and offering more secure connections. But users are still wary about the services already offered by them. So there appears to be some room for Amazon to grow.
Amazon WorkMail allows users to securely exchange email, manage contacts, share calendars, and book resources using the same email applications they use daily including Microsoft Outlook, their Web browser, or their native iOS and Android email applications.
WorkMail costs $4 per month and includes 50 GB of mailbox storage per user. Google Apps charges $5 per user per month and Microsoft charges $6 per user per month for Office 365. So it is cheaper than the rival services.
R.W. Baird analyst Colin Sebastian expects as reported in the media that WorkMail opens up a $1 billion revenue opportunity for Amazon.
The company seems bent on spending huge amounts of money for staggeringly low returns, which has brought it under a certain amount of pressure from investors who are increasingly unimpressed with its huge investments that continue to yield low returns. So an offering such as this may be welcomed by investors since it will immediately add to its revenue.
Nevertheless, investors still believe in Amazon’s prospects, especially its cloud computing business, Amazon Web Services as well as Amazon Prime, which has been increasingly adding subscribers to its list.
But because of the uncertainty regarding its investment plans and the probability of continuing losses in the near term, we recommend investors avoid the shares. But that could definitely change following the recent launch and the company’s earnings report which is set release to today.
Amazon shares carry a Zacks Rank #3 (Hold)
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