Cloud Computing, The Future, and Your Money: Google Inc (GOOG), Amazon.com, Inc. (AMZN)

Google and Microsoft are making a comeback.

In 2006, Google invested over $600 million to establish a state of the art, energy efficient data center that could potentially serve as the hub for the firm’s cloud war against Amazon. As the New York Times once reported, “In Google’s vision of the future of the Internet, the live streaming of 3-D medical images from a rural health clinic to a specialized medical center or the downloading of a full-length movie in a matter of minutes would become commonplace.”

Now, the search engine giant offers Google Compute Engine, an application which enables organizations to “run large scale computing workloads…hosted on Google’s infrastructure.”

Then, Microsoft released Windows Azure, a platform that “enables you to quickly build, deploy and manage application across a global network of Microsoft-managed datacenters….” While Amazon is still the clear leader in the market services sector of cloud computing, Microsoft and Google are poised to rock Amazon, particularly in data storage.

All three firms are undergoing price wars, and as of now, Azure seems to be winning. A quick look at the firm’s current cash position also reveals that Google and Microsoft have the means to continue to wage war on Amazon.

Amazon	$11.45B
Google	$48.09B
Microsoft	$68.1B

*data from Yahoo!Finance

AMZN Profit Margin Quarterly data by YCharts

As aforementioned, Amazon’s revenue is growing—without churning much of a profit. However, Google and Microsoft, simultaneously grow their revenue and profit. Unless Amazon makes some changes, investors should be wary about its potentially inflated stock price. While I do not think that Amazon is a bubble that will burst, I do expect to see Google and Microsoft further expand into the cloud computing industry—ripping Amazon of some market share.

Conclusion

Investors should be watching Amazon, Google, Microsoft, and even the Cloud Computing Index Fund for growth opportunities. Why? For one, the demand for the services is growing while the cost to provide the services is stable and even decreasing for some firms.

p.s. Fortunes will be made by smaller cloud firms in this industry as the big 3 continue to go head to head.

The article Cloud Computing, The Future, and Your Money originally appeared on Fool.com and is written by Brendan Marasco.

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