Forget Amazon the retailer — the company's biggest growth opportunity is probably the cloud.
CEO Jeff Bezos is applying his time-honored strategy: Slash prices and launch hundreds of new products to win market share.
The strategy seems to be working: Amazon Web Services (AWS) now accounts for around half of all cloud computing platform sales across the industry, according to RBC Capital Markets analysts Mark Mahaney.
Competitors — including biggest names in tech: Microsoft, Google, IBM, Oracle and Rackspace — all have lost market share to AWS, as Bezos continues his price war, known in the industry as "The Race to Zero."
It's this that makes "AWS re:Invent" — the company's developer conference in Las Vegas, which kicks off on Wednesday — arguably the cloud computing industry's most important annual event. Analysts and investors will be watching closely for any indication of how aggressive Amazon plans to be with pricing.
"Everyone is always very focused on whether or not they announce minor price cuts or major price cuts," said Barclays analyst Paul Vogel. "The pricing environment seems to have moderated a little bit so it doesn't seem to be competitive in nature, so it's really just a question of how aggressive Amazon wants to be in terms of pushing the envelope."
Amazon has slashed prices 49 times since launching the business in 2006, including several cuts this year. On the latest earnings call, CFO Brian Olsavsky told analysts to expect more. Piper Jaffray analyst Gene Munster expects Google Cloud Platform, IBM Cloud, Rackspace and Oracle to become less relevant players in the cloud computing or Infrastructure as a Service (IaaS) wars and for Microsoft Azure to trail AWS in the No. 2 position.
"Oracle would say they are the biggest threat because they're cutting pricing, but Oracle came out with a significant reduction in pricing, we're talking about a 90 percent price cut. AWS didn't lower their pricing and they still gained market share, so it's not just about pricing," said Munster. "Probably the ones most likely to chip away could be a Google or a Microsoft, but the numbers have not suggested that, the numbers AWS continues to gain fractional market share," said Munster.
"It is not just price: they seem to be leading in terms of product innovation," said RBC's Mahaney.