Netflix's (NFLX) Dependence on Amazon (AMZN) Finally Bites Back (RAX) (IBM)

December 26, 2012 7:37 AM EST
Like Samsung and Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN) and Netflix (Nasdaq: NFLX) have an odd working relationship.

According to data out today, Netflix saw an outage of its services on some devices Monday afternoon. The Los Gatos, CA-based provider of TV and movie content blamed Amazon operations on the event.

Netflix said services were restored on Tuesday morning.

Some other companies also said Amazon was hampering business via its Amazon Web Service (AWS). AWS offers Internet and data storage for companies through its servers. Amazon said operations at its Northern Virginia facility were to blame.

Netflix competes with Amazon Prime for viewership, but relies heavily on AWS. CEO Reed Hastings noted that about 95 percent of the company's storage needs are done through AWS.

The event hit home for many families, with one subscriber telling the WSJ he couldn't watch a documentary he wanted to and instead had to settle for watching "Christmas specials." The humanity!

The testament from Netflix really does characterize how strong a grip Amazon has on a lot of companies. Its continued investment and expansion of cloud services could also negatively impact names like Rackspace (NYSE: RAX), CenturyLink (NYSE: CTL), IBM (NYSE: IBM), Dell (Nasdaq: DELL), and others.

Shares of Netflix are flat early Wednesday.

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