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The day Amazon Web Services (AWS) announced the news, the price of Rackspace‘s stock dropped as well. The smaller providers competing with AWS got one more tough call to make to their investors: when to drop their prices. (Rackspace did so on Wednesday.) Finally, Hewlett-Packard, IBM, Microsoft, and the other big guys also have to lower their quotes to be competitive with AWS.
There’s another aspect to Amazon: it has huge revenues and doesn’t care if it makes a loss or a very small profit. 2012 revenues of $64 billion and it still managed to lose money. And importantly: its shareholders stick with it.
That’s not true for Rackspace, Hewlett-Packard, IBM, Microsoft, etc. If they miss earnings then Wall Street punishes them.
Who can win against a competitor that isn’t all that concerned about making money? Share your thoughts on this and don’t forget to like our page
Source: Associated press