Amazon.com (AMZN) recently announced that it will make its online services for building and running large software applications, Amazon Web Services available from data centers in Western China. Amazon has even entered into definitive agreements with Beijing and Ningxia governments in this regard.
Amazon will not operate these new data centers on its own. Instead, Amazon’s services will be offered through local Chinese data center operators and Internet service providers such as ChinaNetCenter and SINNET. This, in turn, will bring the services under Chinese law and not the U.S. law. This will help Amazon to avoid having to turn over (under the U.S. Patriot Act) any information that customers would upload to the Chinese cloud services. Microsoft Corporation (MSFT) also follows this practice in China.
Though this is not the first time that Amazon has attempted to enter the market for cloud computing services in China, yet it is believed to be a much more coordinated effort. It is not only trying to pitch for more business from larger corporates but also to capitalize on the expanding community of smaller and medium-sized businesses in the country.
Amazon’s entry will pose tough competition for Alibaba, which is considered to be the e-commerce giant in China.
Amazon has gone on to become a veritable consumer electronics giant from being an Internet retailer initially. The company is planning to refresh its line-up of Kindle Fire tablets in the next few months. But Amazon might not stop there. If rumors are to be believed, the company has many more devices in the works, including a smartphone, an audio streaming device, and an Apple (AAPL) TV competitor.
Though Amazon’s hardware competes with both Apple and Google (GOOG), it’s much more destructive for the search giant. This is because Amazon has adopted Google’s Android operating system, but not Google Play.
Currently, Amazon has a Zacks Rank #3 (Hold).
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