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A cloud computing price war pitting Google vs. Amazon Web Services could be back on amid Amazon’s customer defections, most notably Apple ( AAPL ), says Oppenheimer. The investment bank cut its price target on Amazon.com ( AMZN ) stock and lowered its AWS revenue estimates. Oppenheimer analyst Jason Helfstein forecasts that AWS will slash prices for cloud services by 10% after Alphabet ( GOOGL )-owned Google’s user conference Wednesday and Thursday. Some observers speculate that Google could cut prices for its infrastructure-as-a-service offering, in which customers rent computer servers and data storage systems via the Internet. Apple has reportedly shifted some of its iCloud business to Google from AWS. AWS is the biggest IaaS provider, followed by Microsoft ( MSFT ) and Google. Helfstein says that AWS also faces market share gains by Microsoft’s Azure cloud service. “We believe AWS will reduce prices 10%, vs. 5% previously, following this week’s Google Cloud Platform event,” wrote Helfstein in a research report. “While AWS is still far ahead of the competition in features and services, as reflected in zero price reductions in 2015, we cannot ignore recent press reports of potential client losses (Apple, Spotify and Dropbox).” The new boss of Google’s cloud business, Diane Greene, will make her debut at this week’s user conference. In November, Google acquired Greene’s startup, Bebop, for $380 million. Helfstein lowered his price target on Amazon stock to 660 from 700. He lowered 2016 and 2017 AWS revenue estimates by 4% and 11%, respectively. While AWS has been the biggest IaaS price-cutter of the last decade, Google has been aggressive since moving into the market. Google slashed prices in March 2014, October 2014 and June 2015. “With no price reductions in 2015, AWS clearly viewed itself in a very strong competitive position. However, this was out-of-sync with the historical trend of 20%-25% annual price reductions and the 45% reduction in 2014 (mostly in reaction to Google),” added the Oppenheimer analyst. Scalper1 News
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