The largest legal battle in the history of the cloud ended this June when a federal court dismissed a complaint by IBM against the CIA’s decision to award a $600 million IT infrastructure contract to Amazon. The ruling marked a major victory for AWS, but the deal pales in comparison to what’s at stake now: a trillion-plus cloud market that Jeff Bezos’s firm is well on its way to overtake.

Can Big Blue keep pace with Amazon? That’s the question we asked Constellation Research founder and theCUBE alumnus Ray Wang at IBM Information on Demand 2013. The analyst says that the vendor has the “option” of leveraging its software portfolio – which includes an expansive line up of Big Data solutions – to go after AWS with mobile and analytics services.

IBM should focus more on evangelizing customer stories, Wang continues, and at the same time double down on predictive analytics and cognitive computing. The company has already made a lot of progress since the previous the previous IoD conference.

“We’re seeing them in more deals now,” he details.” Before we’d see a lot more of these traditional SAP, Oracle [deployments] kinda compete, and a little bit of IBM Cognos. Now we’re seeing them in a lot of end-to-end deals. What we’re talking about is not IT deals, these are line of business folks that say ‘look, I really need to change my shopping experience with what you guys have.’”

IBM is well-positioned to deliver cloud services, but Amazon shows no sign of relenting. Wang points out that the company is not only growing in the enterprise, but also diversifying into newspaper publishing and disrupting the shipping industry with Sunday deliveries.

Click the video below for the full analysis.