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Amazon's 2nd GovCloud Region to Boost Government Clientele

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Amazon’s (AMZN - Free Report) cloud computing arm Amazon Web Services (“AWS”) is focused on bolstering presence in the cloud industry through expansion of its availability zones.

The company has rolled out its second isolated infrastructure region for government agencies and the organizations in highly regulated industries.

The latest region is called AWS GovCloud (US-East) Region which is based in the eastern part of the United States. With the launch of this region, the organizations in the public sector will be able to accomplish their critical programs by running their workloads on AWS with low latency and high security.

This move of AWS will aid the company in attracting more government organizations to its platform especially those which are based in the East Coast, in turn bolstering its government customer base.

Coming to the price performance, shares of Amazon have returned 39.5% on a year-to-date basis, outperforming the industry’s rally of 0.6%.


Growing Focus on Government Space

The latest move of the company is in sync with its strong efforts toward gaining traction in the government sector. It is also the result of strong demand emanating from this region on the back of the company’s government customers.

This demand stems from the success of the first such region named AWS GovCloud (US-West) which was launched in 2011. Since then Amazon is witnessing growing adoption of AWS in the public sector.

Notably, the company strives to cater to the stringent, high security and compliance requirements of the U.S. based regulated industries and public sector with AWS GovCloud Regions.

Competitive Gain

We believe all these will continue to aid the company’s momentum in the public sector. Further, strengthening cloud infrastructure for government agencies will provide a competitive advantage to Amazon against the likes of Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and IBM (IBM - Free Report) .

Microsoft provides high security, protection and compliance services to public sector organizations via Azure Government.

Similarly, IBM also offers Federal government cloud solutions by meeting the Federal Risk and Authorization Management Program (FedRAMP), a compliance requirement of the U.S. Government.

Further, Google Cloud provides government solutions and is also gaining traction among the government agencies.

Nevertheless, the expanding AWS GovCloud Regions will continue to aid Amazon’s momentum in the public sector. Further, the company meets several compliance requirements like FedRAMP, Federal Information Security Management Act (FISMA), US International Traffic in Arms Regulations (ITAR) to name a few.

Additionally, AWS services are benefiting from the increasing number of availability zones. Notably, the new region will be comprised of three such zones thus bringing the total number of availability zones to 57 globally.

Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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