Corporate customers ought to think about diversifying beyond AWS, Azure and Google Cloud for cloud storage and embedded capabilities such as AI/ML/NLP and more. Sure, there is Oracle, Alibaba and others. Yet it would seem now may be the time for Industry-focused players to offer cloud services alternatives.
Tickers mentioned: AMZN, BABA, FIS, GOOG, MSFT, ORCL, PYPL, SQ, SSNC
It would seem that a well-placed striked by China or other State actors could take out AWS, Azure or Google Cloud for a period of time. Many corporate clients diversify across AWS, Azure and Google Cloud for risk mitigation purposes. However, is that true diversification?
It would seem that now would be a good time for industry-focused players to offer a tier II cloud alternative to these giants. For example, what if PayPal, Block and Stripe were to pool resources and create a joint-venture which would offer basic cloud services (remote server capacity), baseline AI/ML/NLP capability and a stack of payment-related applications and services to where corporate cutomers could build a turnkey payments offering?
Similarly, what if BlackRock, FIS Global and SS&C were to pool resources and offer a similar technology stack as in our payments example, the only difference being that at the application layer the applications would be Capital Markets-focused offerings?
Why the joint-venture structure between competitors you ask? Well, to be price competitive with AWS, Azure, Google Cloud, Oracle and Alibaba, industry-specific players such as FIS, SS&C, Block, PayPal and Stripe would need to achieve greater scale at the remote server offering layer as land, data centers and hardware is not cheap.
Perhaps some of the Biden Infrastructure funds (printed money), could be allocated toward supporting the creation of industry-specific alternative cloud platforms to AWS, Azure and Google Cloud.
Our proposal requires an appetitie for risk on the part of the industry-specific vendors we have mentioned and suffers from a complex ROIC calculation that is wrought with uncertainty. In addition, our proposal requires cooperation between legacy competitors. Thus, this scenario is unlikely unless it is driven by a Federal Government initiative created to mitigate the risk of the U.S. economy being overly-dependent on AWS and Azure and to a lesser degree Google Cloud.