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Amazon.com (AMZN): The 800 Pound Gorilla in the Cloud


Earlier this week search kingpin Google (GOOG) unveiled it's latest in a long line of free products with the release of Google Drive. Drive joins Microsoft's (MSFT), Skydrive, Dropbox, Apple's (AAPL) iCloud and heaven knows who else in the competition to satisfy your cloud storage needs.

These products and the hardware that drives them cost money to develop and maintain, while cloud services are generally free for the amount of space the average user needs. The mystery is why so many companies are jumping into the space.

Regarding Google Drive in particular, David Garrity of GVA Research questions whether or not there's much "there there." "Beyond YouTube.com they really haven't done anything content-wise and they really haven't done anything to let people 'host their own libraries' if you will," Garrity says in the attached video.

Up until Drive was released it was hard to imagine why Google would want to host people's content libraries. It still is hard to imagine. Google Drive "doesn't seem to have much of a strategic plan behind it," according to Garrity.

As for the rest of the cloud competition Garrity says, "It's important to talk about the 800 pound gorilla in the room, which is really Amazon (AMZN)." Of course, most people weren't talking about said gorilla because they didn't even know it was there. Amazon?

Garrity points out that the internet retail giant has been in the cloud business for the last decade, which is how any e-book you've bought with the company can be added to a new device seamlessly. That's something Amazon gives away for free now and could be key for them to make inroads against iTunes.

Armed with cloud, Amazon could conceivably chip away at iTunes' enormous content lead by grinding away with lower prices. "It's certainly a game Amazon knows how to play well," offers Garrity.

All those free-standing cloud companies make little sense as standalone business but, if matched with the right content player, could add up to something compelling.

Among the possibilities Garrity considers is a mash-up of Netflix (NFLX) and someone like Wal-Mart (WMT), matching streaming with an virtually unlimited budget with which to create storage and build a library. This would finally give Wal-Mart an on-line product of note, not to mention provide Netflix with a much-needed rescue.

For now all of this is hypothetical. Much as was the case in the giddy bubble days when companies such as Kozmo.com gave the tech-literate something of value for free, the cloud wave lets you store and share files at no cost.

Enjoy the clouds now, someday soon companies are going to start trying to make you pay for them.