For months, they’ve complained about each other. Now rivals of Amazon.com, Inc. (NASDAQ: AMZN ) are coming together to counter the e-commerce giant.
Most notably, IBM Corporation (NYSE: IBM ) announced a new effort last week, saying that it and eight cloud computing companies had formed a new alliance to compete with Amazon Web Services (AWS).
"The new data platform is designed to advance AI (artificial intelligence) capabilities and help organizations build and deploy cognitive solutions in private clouds," IBM said in a statement about the initiative.
The new group, called the Open Cloud Federation, will include Amazon, Microsoft Corporation (NASDAQ: MSFT ), Hewlett Packard Enterprise Company (NYSE: HPE ), Intel Corporation (NASDAQ: INTC ), SAP SE (ADR) (NYSE: SAP ), Oracle Corporation (NYSE: ORCL ), IBM and VMWare, Inc. (NYSE: VMW ). Amazon stock prices dropped as the news broke, but this didn’t keep the initiative from launching.
"It will work to accelerate the adoption of cloud technology, transform the way businesses create, consume and analyze data, and accelerate the growth of the cloud ecosystem," IBM said.
How the Partnership Works
This new alliance might just allow these companies to create a new cloud computing marketplace that will work with other cloud services in the industry. Moreover, the new group says its primary goal is to encourage enterprise customers to switch to IBM and other cloud providers.
"With the open-source cloud we are creating, customers will have a higher expectation that hybrid IT — both public and private — gives them an open choice of infrastructure, technologies and applications," said Waheed Alli, IBM vice president of analytics and data platform.
From Amazon’s Point of View
Amazon’s cloud marketplace, Amazon Web Services, introduced a similar initiative. The Amazon Intelligent Cloud program is a group of eight high-tech companies — Google Cloud, Microsoft Azure, ARM, Gemalto, Nebula, OpenStack Foundation, Oracle and NVIDIA Corporation (NASDAQ: NVDA ) — and its mission is to work together on new technologies and standards.
"We want Amazon Web Services to be the biggest IT platform in the world," said Mike Torres, vice president of Amazon Web Services Open Networking.
This new alliance could help the companies compete against Amazon’s cloud marketplace, which more than 54% of the Fortune 500 use for more than 1,000 of their cloud computing solutions.
The Alliance’s Commerce Structure Could Be a Problem
But, there could be trouble ahead, if the alliance were created as a completely new cloud marketplace. Amazon’s marketplace competes with each vendor that joined the partnership, and IBM already owns a hybrid cloud marketplace, called IBM Hybrid Cloud. If the new alliance started off its marketing and sales efforts separately, it could offer a clearer competition to Amazon.
If, on the other hand, it follows the way the alliance is structured — a group of eight companies selling different cloud solutions — then IBM could also target customers who use Amazon Web Services.
This is possible because, in addition to the IBM Hybrid Cloud marketplace, IBM has already launched a cloud migration tool that it calls the Cloud Marketplace, which provides a way for customers to order IBM tools, cloud-based products and other technologies.
IBM has also said that it will provide an end-to-end hybrid cloud management system called i360, which it says will improve users’ experience when it comes to providing data access across different cloud vendors. This shows that IBM doesn’t plan to forget about Amazon Web Services, which is how it will have to compete with the new alliance of nine cloud companies, which it’s unlikely to call its own cloud marketplace.
The Bottom Line on Amazon’s Cloud War
For now, it’s clear that Amazon and rivals in the cloud computing industry are going to have to work together to fight off a massive marketplace that includes new cloud-storage providers like Atlassian Corporation Plc (NASDAQ: TEAM ) and Amazon’s own Cloud Marketplace.
IBM and the other new alliance members have made this clear, but companies with established marketplaces might not. Which puts more pressure on the alliances of IBM and other cloud companies to be better positioned to compete with Amazon.
And, because so many cloud companies are already on different sides of the Amazon marketplace, customers with an Amazon profile might have problems when shopping for cloud solutions.