On July 14, as Amazon further developed in the 'non-core' market, Wall Street investment bank Cowen has raised Amazon's target price from $2,000 to $2,100, which means that in the eyes of investment banks, Amazon's share price will perform better and better in the future.
'We also expect continued excellent performance of AWS cloud services and Amazon's growth in emerging business areas such as advertising, which are the main drivers for Amazon's stock price rise,' said Cowen analyst John Blackledge.
Now, investors have heard the sound of a completely different market that Amazon may enter. This market makes a lot of sense: network hardware.
Foreign media reported that Amazon is considering setting up its own network switching equipment, which will compete with Cisco network equipment.
It is understood that Cisco shares fell 4% on Friday, and the market value evaporated about 8.5 billion US dollars (about 56.8 billion yuan) Shares of Internet companies Arista Networks and Juniper Networks also fell. Broadcom's share price continued its plunging trend on Thursday, falling more than 3 percentage points on Friday.
It can be seen that this plan poses a great threat to top network hardware vendors. After all, Amazon is now in the cloud computing field, which is in charge of a huge cloud computing data center. These data centers can already allow Amazon to enter the network hardware manufacturing market. Professional knowledge and skills.
Plan to release the product within 18 months but may also 'give this effort'
According to sources, Amazon is developing its own network switch line to attract enterprise customers, and will actively provide more customized services for enterprise customers to differentiate the services provided by suppliers in existing markets, so that customers can use fewer engineers. Manage your own data center to save costs and increase efficiency.
Amazon is currently testing network switch products with some customers and plans to release the above products within the next 18 months. However, the news also said that Amazon may eventually choose to give up this effort.
How to interpret capital, media and other circles?
Although Amazon's high-profile plan has triggered market shocks, it is still full of different voices.
Analysts at Nomura Securities, a Japanese brokerage, said that even Amazon's mass-based companies may find it difficult to enter the market. Fortune 500 companies typically use multiple cloud platforms, not just AWS, and Amazon may have a hard time Cisco's after-sales support. Therefore, Amazon may sell its network switching equipment to small businesses.
An authoritative foreign media believes that the cooperation between network equipment suppliers and large company data centers is deeply rooted. Amazon wants to convince customers to replace existing equipment, and selling such products in the market may face enormous challenges, because corporate customers are often at the foundation. A large budget is invested in the facility, which greatly increases the switching costs associated with alternative solutions.
IT professionals typically plan their infrastructure roadmaps several years in advance, and break-even calculations are a key part of this process.
Why do you want to cut into this field? Data shows everything
Lei Feng.com understands that network switching equipment usually allows users to switch back and forth between private data centers and public cloud platforms.
The main functions of the network switch include physical addressing, network topology, error checking, frame sequence and flow control. Currently, the switch also supports VLAN (Virtual Local Area Network), support for link aggregation, and even some. Has the function of a firewall. Currently in the world, Cisco, Hewlett-Packard, Arista Network, Jieke Network and Huawei in China occupy a mainstream position in this field.
Globally, data center network equipment revenue totaled $13.7 billion in 2017, up 13% from 2016. Includes data center Ethernet switches, application delivery controllers (ADCs) and SD-WAN sales, this momentum was in 2018 Will continue.
IHS Markit recently released a quarterly analysis report for Ethernet switches. IHS said that the Ethernet switch market grew by 12% year-on-year, driven by data center and campus upgrades.
The report states:
1. In the first quarter of 2018, global Ethernet switch revenues totaled $6.1 billion, an increase of 12% over the same period last year.
2. 100GE continued to grow, more than double the year-on-year growth, and shipments reached 1.7 million ports in the quarter; 40GE port shipments were flat year-on-year.
3. PoE (Power-over-Ethernet) port shipments increased by 11%.
4. The number one supplier Cisco increased by 7% year-on-year, the second-ranked Huawei increased by 43%, the third HPE (Aruba) increased by 2%, and the fourth Arista increased by 40%.
At this stage, the data center's transition to the 25/100GE architecture is in full swing, driving strong growth in 25G, 100GE and white box shipments. The re-growth of PoE shipments marks an increase in exchange demand in the park. AWS wants to enter this market, perhaps it is understandable.
Under the congenital advantage, the necessity must be carefully considered
Amazon is very good at providing managed cloud services, and has gained more than 54% of the global market share by virtue of neutrality, ranking first. Considering Amazon's dominant position in the cloud infrastructure, network switches can and should be vertically integrated. field.
Once you start to enter the network hardware field, it will increase its revenue source in a certain layer, but it cannot be ignored that it will bring some concerns to the current client company, that is, whether it will encounter the double standard of AWS.
Given that Amazon's borders are also expanding, AWS will not be able to maintain its current status (at least not shrinking), which will cause unnecessary trouble for Amazon's expansion, and this will be Amazon's purpose. Deviate.
