As Amazon Approaches $1 Trillion Market Cap, Solution Providers Place Their Bets

Wall Street firm Morgan Stanley believes that Amazon could be a $1 trillion company within the next twelve months, but solution providers have differing opinions on whether the unprecedented growth will translate into more opportunities for the channel.

A new report published this week by Morgan Stanley included revenues from five Amazon business segments, including its cloud computing business Amazon Web Services (AWS) and the provider's retail business. Morgan Stanley analyst Brian Nowak, the report's author, estimated AWS to be valued at $270 billion.

"We see size as a good thing," said Marilyn Daly, vice president of marketing for Logicworks, a Premier Amazon Consulting Partner. "As Amazon continues to grow, the [concern] is that their partner ecosystem will grow too, and having the programs in place that [Amazon] has for partners will help us differentiate."

[Related: AWS Propels Amazon To Another Profitable Quarter]

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The AWS Partner Network (APN) is Amazon's global partner program for its cloud services arm, which consists of consulting partners, including VARs, MSPs, and systems integrators. Consulting partners that meet Amazon's monthly recurring revenue requirements and who have built a professional services business around AWS can apply to join the AWS Channel Reseller program. Amazon also has a network of technology partners made up of hardware and software vendors. Combined, AWS has a robust ecosystem of thousands of partners.

Logicworks, a 25-year-old MSP, pivoted its business about five years ago to focus primarily on migrating, managing and automating enterprise workloads on highly customized AWS infrastructures. Today, the New York City-based company finds itself within the ranks of the Premier Partner group, which at last count during the AWS re:Invent 2016 show, totaled 55 companies.

Logicworks, which also recently began partnering with Microsoft Azure and is currently developing a practice around Google Cloud, sees Amazon's growth as exciting. On a smaller scale, Logicworks is on a similar growth trajectory as the cloud computing giant as more business customers seek AWS-specific expertise, Daly added.

But Amazon's meteoric growth won't necessarily encourage the cloud giant to become any more channel-friendly, said Jim Suss, co-founder and president of LAM Technology, a Fort Worth, Texas-based solution provider.

"I don't honestly think that Amazon's size will open the door for more partnership. When you're one of the biggest companies, many times you learn quickly that you don't need to partner with anyone," Suss said.

Solution providers said that despite hyperscale cloud providers not being necessarily known for their channel-friendly strategies, business customers are nonetheless asking for these popular services.

Deciding to place the lion's share of its bets on AWS as opposed to a cloud provider that conducts most or all of its business through the channel was the right decision for Logicworks and its base of health care, finance, and retail customers, Daly explained.

"From a business perspective, you might make more margin from a [channel-focused cloud provider], but from a customer value standpoint, offering knowledge and experience around AWS lets us be more of a partner to our end customer, which is ultimately the better business proposition for us," she said.

The opportunity around these hyperscale cloud services, such as AWS and Azure, lies in providing connectivity to the cloud and support services wrapped around popular cloud offerings, according to one cloud-focused solution provider that asked not to be named.

"We can navigate all the different options for customers, like private, public, and hybrid, regardless of who the cloud provider is, and then add support around the public cloud players, such as AWS and Azure," an executive for the solution provider said.

LAM Technologies, which got its start selling connectivity, now includes cloud services as a big part of its portfolio. Suss said that his company has been working with channel-friendly cloud providers, such as Rackspace and TierPoint, with more of a regional presence and local support.

Like LAM, the anonymous solution provider said it is presenting more channel-centric cloud players, like Rackspace and RapidScale, to its end customers looking for cloud services.

AWS, for its part, is investing in its partner network with education and certifications in topics like migration, security, and handling healthcare-related workloads, Logicworks' Daly said.

"AWS really wants to help customers find the right partner for moving or managing workloads in AWS," she said.

Amazon reported its Q3 2017 earnings in November, reporting that AWS closed in on a $20 billion revenue run rate. The company said that $1.17 billion in revenue for the quarter was generated by AWS.

Morgan Stanley's Nowak wrote that Amazon's stock price could reach $2,000 per share by the end of 2018.