Amazon's (AMZN) AWS Extends Deal With Zoom, Boosts Clientele
Amazon’s AMZN AWS has recently been expanding the client base, courtesy of the ever-increasing need for online services due to the COVID-19 pandemic.
Recently, AWS expanded the partnership with Zoom Video Communications, Inc. ZM.
Per the deal, Zoom will continue to leverage AWS’ global infrastructure and other machine learning, analytics, compute, storage, content distribution, as well as security services to create a secure extension of its data centers.
In addition, AWS and Zoom will develop new solutions for the latter’s enterprise users to help organizations run hybrid office, as well as remote work models. In this regard, Zoom will integrate the video meeting service into select Amazon Echo Show devices. Also, it plans to incorporate Alexa for Business features into the Zoom Rooms service.
Notably, Zoom has been witnessing surging demand due to the pandemic. The increasing use of its platform for various needs ranging from online education to business meetings to social gatherings to several other types of classes has led to exponential increase in Zoom users as well.
To meet this unprecedented increase in demand, AWS has provided Zoom with thousands of Amazon WorkSpaces virtual desktops to help employees work remotely amid the pandemic. In addition, AWS has provided cloud infrastructure and security monitoring support to help Zoom successfully stream major events in a more secure manner.
Zoom’s partnership extension with AWS highlights the efficiency and reliability of AWS’ innovative cloud products, as well as services.
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Client Base to Expand
The recent move by Zoom is in sync with AWS’ strategy of expanding clientele. In addition to this, AWS has been selected as the primary cloud provider by Itau Unibanco Holding. The latter has decided to move the majority of its IT infrastructure to AWS.
Further, MercadoLibre selected AWS as its preferred long-term strategic cloud provider. Further, AWS was selected by Standard Chartered Bank. Moreover, the latter signed a five-year agreement to leverage AWS’ reliable infrastructure and cloud services across the entire business in a bid to digitize operations and deliver personalized banking services across its 60 markets worldwide.
We believe that expansion of customer base will continue to drive AWS’ top line in the near and long term. Moreover, it will help Amazon in sustaining its dominant position in the cloud market.
AWS’ market share was around 32% in third-quarter 2020, per a Synergy Research Group report. Although cloud service providers like Microsoft MSFT Azure, Alphabet’s GOOGL Google Cloud and Alibaba Cloud witnessed expansion in market share in the said quarter, AWS maintained its lead position.
Bottom Line
Cloud computing has been emerging as a key technology to fight the battle against the coronavirus pandemic. This technology has been witnessing higher usage globally as it allows data interoperability in a scalable, cost-efficient way by data collection, processing, analyzing and sharing across platforms.
Amazon is the leading provider of cloud infrastructure as a service to enterprise customers. The expanding customer base of AWS driven by strengthening cloud offerings will continue to aid Amazon's dominance in the global cloud space.
Even more encouraging is the fact that AWS generates much stronger margins than the traditional retail business, which should remain a positive for the company’s profitability as it continues to grow in the mix.
Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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