Amazon's Biggest Business Will Have Nothing To Do With Retail

A day after Amazon unveiled new features to improve Amazon Web Services, Morgan Stanley published a note saying that AWS is becoming the "new normal" for companies, replacing their own in-house data centers.

"AWS will remain a dominant market player and continue to disrupt existing enterprise infrastructure," the note said.

On Wednesday, at the reInvent Conference, Amazon Web Services leader Andy Jassy said he believes AWS could be "the biggest business" at Amazon. This seems reasonable: Gartner predicts that companies will spend more than $3.8 trillion on IT in 2014, and that money will increasingly go to cloud services over the next decade. And Amazon is still in the driver's seat there.

Customers on the show floor told Morgan Stanley that AWS has a "big head start" over Microsoft's Azure and Google's cloud offerings in terms of features, and customers were "positive" about Amazon's customer support - an important point, as Amazon has much less experience supporting enterprises than Microsoft.

The firm believes AWS's early start gives it a "first-mover advantage" over others, and its new features make it a "one-stop solution" for IT managers to migrate data on to the cloud. Also, it says AWS has proven to be a secure platform, as evidenced by its 900-plus government agency customer base, including the CIA.

And despite AWS having cut its cost 45 times over the last six years, Morgan Stanley said it sees it turning profitable and adding significant value after 2017.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.