Amazon.com, the world’s largest online retailer, is expanding its cloud-computing sales to the U.S. government, joining Google and Microsoft in seeking federal orders for Web-based services.
Amazon says it has gone from having no dedicated government sales division a few years ago to providing cloud-based computer services in 100 government offices including federal agencies such as the Treasury and State departments. The Seattle-based company opened data centers in Oregon in August focused on government clients.
Companies are targeting the U.S. government as it cuts costs by shifting $20 billion of the $80 billion in yearly information-technology spending to cloud computing, which lets users share resources such as data storage and software.
Amazon “can run it better for the government,’’ Herman Leung, analyst at Susquehanna International Group in San Francisco, said in an interview. “As you gain critical mass, those cost savings you can pass on to consumers.’’
The company’s Web services, including cloud computing, will account for $979 million of its projected $49 billion revenue in 2011, up from $204 million of $25 billion in 2009, Leung estimated. The company doesn’t disclose those figures.
“It’s very difficult to ignore the U.S. government’’ because of the size of its budget, Teresa Carlson, head of Amazon Web Service’s public division, said in an interview.
The government has been using Amazon Web Services since the unit’s inception in 2006, Carlson said. The company focuses on Web site hosting and data storage, while Google and Microsoft’s main cloud-computing sales to the United States are for software, such as word processing and spreadsheet applications.
Amazon has worked on Web and cloud development for agencies on contracts worth at least $4.8 million in the past two fiscal years, according to data compiled by Bloomberg Government.
The company also receives a portion of the money on contracts won by companies that use its services in their own federal offerings. Such third-party vendors include Apptis, Smartronix and Redwood City, Calif.-based Oracle.
Work performed by Amazon’s third-party vendors may have generated as much as $475 million in sales in the 2010 and 2011 fiscal years, based on contract awards for Internet and systems integration held by Amazon’s federal partners, according to Bloomberg data.
In June 2010, Smartronix received a $3.7 million contract to revamp and operate the Treasury Department’s Web site using Amazon’s cloud products. Closely held Smartronix, based in Hollywood, Md., is scheduled to complete the project by September 2012, government data show.
Amazon started hearing from its partners earlier this year that agencies needed data-storage centers accessible only to U.S. citizens or permanent residents to comply with a law requiring limited access to defense-related information, Carlson said.
Amazon opened a group of data facilities in Oregon to offer that level of control, she said. Even though “all of our clouds are highly secure,’’ agencies including NASA’s Jet Propulsion Laboratory are seeking centers that restrict access, she said.
Hackers used the company’s Elastic Computer Cloud, or EC2, in an April attack on Sony’s online entertainment networks that compromised more than 100 million user accounts, according to a person familiar with the matter in May.
“This could have happened from any computer and there’s no evidence showing the attacks came from’’ Amazon Web Services, Tera Randall, an Amazon spokeswoman, said in an e-mail.
Amazon Web Services received a “moderate’’ security certification from the U.S. General Services Administration in September, expanding the government work the company is qualified to undertake. In the federal market, as much as 60 percent of information-systems work requires a moderate rating, Carlson said.
That rating, created under the Federal Information Security Management Act of 2002, requires controls such as separating employee duties to deny any individual the capability to damage a system, and using temporary lockouts after a certain number of failed login attempts.
The government’s push to adopt cloud computing has sparked contracting feuds between companies including Microsoft and Google, rivals to provide software for word processing and e-mail to agencies with thousands of employees.
Google sued the Interior Department in October 2010, alleging that a planned $59.3 million e-mail contract unfairly favored Microsoft and didn’t give full consideration to the company’s Google Apps for Government product.
Google lawyers argued that the Interior Department failed to follow federal procurement laws favoring “full and open’’ competition. The company dropped the suit after the department vowed in September to reopen competition for the contract. Microsoft and Google declined to comment.
Amazon has so far refrained from turning to the courts to secure its portion of government cloud orders. Amazon’s representatives have been spending time in Washington conference rooms and meetings with agency employees to push its cloud services, Carlson said.
The company’s gradual approach to winning government business makes sense, Rob Guerra, a partner at Guerra Kiviat, an Ashburn, Va.-based contract consulting company, said in an interview.
“Taking it a piece at a time and making sure you do a good job’’ before broadening your approach is “a very nice, smooth growth path,’’ said Guerra, who doesn’t work with Amazon or its partners.