Amazon Propositions Uncle Sam

Who says Uncle Sam is too old for the latest technology? According to The Washington Post, federal authorities are not only for, but are encouraging, agencies to move operations to the cloud. Amazon.com (NAS: AMZN) is hoping to take advantage with a new Amazon Web Services business called GovCloud.

The thesis is simple. Create a secure, dedicated infrastructure for agencies that don't want to host their own. Restrict access to those who are government employees and U.S. citizens. Then, when all goes smoothly, cash big checks from the feds. The plan seems to be working so far.

Amazon has been engaging with various departments for more than a year now. Last March, the U.S. Recovery Accountability and Transparency Board migrated to AWS and saved $750,000, the company said in a press release.

Pleased with the results, GovCloud formalizes Amazon's efforts to win additional federal business. Competitors aren't sitting idle, of course. Rackspace Hosting (NYS: RAX) has a relationship with GlobalNet for government site hosting, while AT&T (NYS: T) and Verizon (NYS: VZ) both offer similar services.

But it's AWS that has long been a favorite of new businesses tapping into the cloud computing zeitgeist. Clients include Foursquare, Yelp, and Qlik Technologies (NAS: QLIK) . President Obama is now on Foursquare; having his tech team do more business with Amazon Web Services -- the backbone of Foursquare -- seems natural in all but one way: AWS has suffered stability problems in recent months.

I know; I get the irony. AWS has suffered outages as Congress and regulators have struggled to stabilize the U.S. economy. Government success hasn't come easy. (Or at all, in some cases.) Contextually, this looks less like a smart partnership and more like a cruel joke.

And yet the president and his team may have no choice. The truth about cloud computing is that, over the short term, it costs a lot less to activate someone else's servers and software than to build and secure your own infrastructure. Uncle Sam needs the extra dough. Do you agree? Disagree? Weigh in using the comments box below. You can also addAmazon.com to your watchlist for up-to-date analysis on the stock as soon as it's published.

At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He owned shares of Qlik Technologies at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Qlik Technologies.Motley Fool newsletter serviceshave recommended buying shares of Qlik Technologies, AT&T, Rackspace Hosting, and Amazon.com. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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