Investing in the Cloud

Published on 05/14/18 | Saurav Sen | 3,225 Words

The BuyGist:

  • Almost everyone is migrating to the Cloud. But a significant chunk of that transition is yet to happen.
  • Cloud Computing won’t be a winner-take-all market but its likely that a handful of players will dominate.
  • There are 3 big players in the IaaS segment - Amazon, Microsoft and Google. And there are a few smaller players, led by IBM.
  • IaaS dominance means a captive audience for SaaS and PaaS offerings, which is where the real money is to be made.
  • AI will be a differentiator amongst the major players. It will be infused in the PaaS and Saas offered on any IaaS.
  • Cloud Computing has set in motion the new information revolution in which AI will be disseminated easily throughout our civilization (I hope Stephen Hawking was wrong on this one).

Why this article?

I started looking at Amazon, as I started digging into the Retail sector. After all, any analysis on that sector will be incomplete without a nuanced view on Amazon. It turned out that Amazon is transforming from an e-commerce platform into a Cloud Computing juggernaut. In 2017, for example, Amazon Web Services (AWS) made up a majority of the company’s EBITDA. The trend continued in the first quarter of 2018. Measured by EBITDA or Free Cash Flow, it seems that AWS – not e-commerce – is now Amazon’s base business. It’s only logical then that I put down on paper my view on the Cloud Computing landscape. It’s amazing how one thing leads to another. It’s even more amazing how one thing leads back to things I had thought about earlier while I was digging into IBM: AI and IoT. It’s a small world.

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