Adam Selipsky has taken over at Amazon.com Inc.’s cloud-computing unit this year as it faces the biggest challenge ever to its dominance in the industry. To stay on top, he is taking a page from the playbook of his fast-growing rivals.

Microsoft Corp. and Alphabet Inc.’s Google have come on strong in recent years by offering customers not just the cloud infrastructure that Amazon Web Services pioneered, but also sophisticated and popular end-user software programs, such as those that help turn companies’ pools of data into...

Adam Selipsky has taken over at Amazon.com Inc.’s cloud-computing unit this year as it faces the biggest challenge ever to its dominance in the industry. To stay on top, he is taking a page from the playbook of his fast-growing rivals.

Microsoft Corp. and Alphabet Inc.’s Google have come on strong in recent years by offering customers not just the cloud infrastructure that Amazon Web Services pioneered, but also sophisticated and popular end-user software programs, such as those that help turn companies’ pools of data into charts or tools for employee collaboration.

Mr. Selipsky said Amazon Web Services plans to maintain its lead by offering more applications that can help organizations take advantage of the cloud. For example, it has developed a cloud tool that uses artificial intelligence to digitize and categorize physical documents, and another that monitors the health of the expensive equipment used in the agriculture and energy industries.

“We’re still probably not close to where customers need us to be at the end of the day,” said Mr. Selipsky, who became chief executive officer of Amazon Web Services, or AWS, in May. “We need to build a lot of services. We need to build a lot of capabilities.”

At stake is one of the largest and fastest-growing markets in tech. Cloud services are already worth more than $700 billion. AWS has led and been expanding with the industry for years, but its market share has been slipping, according to research firm Gartner Inc.

Microsoft increased its share of total cloud-computing revenue to 19.7% as of last year, from 8.7% in 2016, while Google more than doubled to 6.1% in that period. AWS’s share of 40.8% last year is still the largest, but it is down from 53.7% in 2016, Gartner said.

Amazon’s rivals have been investing to gain market share. In 2019, Microsoft said it would invest $1 billion in the artificial-intelligence firm OpenAI LP, in part to get its advanced AI capabilities onto its cloud.

This month Google’s cloud unit struck a deal with CME Group Inc. that coincided with its $1 billion investment in the futures-exchange company.

Mr. Selipsky took over from Andy Jassy, who helped start AWS in 2006, building it into a profit juggernaut before being promoted to replace founder Jeff Bezos as Amazon’s CEO in July. The cloud unit generated $4.9 billion in operating income in the latest quarter, more than the amount for Amazon as a whole.

Mr. Selipsky thinks there is still a lot of room for growth in the cloud, giving him a chance to make his own mark on the company. “Something on which I want to be very focused is figuring out more ways to make AWS easier to consume for more sets of customers,” Mr. Selipsky said.

AWS is counting down to the start later this month of its cloud conference, where it is expected to launch new services.

He brings experience that could help the company springboard into more businesses. Mr. Selipsky started in the early days of AWS, working with Mr. Jassy for about 10 years. He left in 2016 to take over as CEO of Tableau Software, a Seattle firm whose software helps organizations better interpret their data by turning it into charts they can tinker with. He helped shift Tableau’s business model from selling software for a one-time fee, the traditional way, to a subscription model in which software is delivered over the cloud.

In 2019, Salesforce.com Inc.

—one of the earliest companies with this software-as-a-service model—bought Tableau for more than $15 billion.

AWS built its head start in the cloud by investing in server farms and renting out that remote computing power to clients. Microsoft and Google have eaten into its lead, in part because they both have large end-user bases and their own popular cloud-software tools—such as Microsoft Word, Excel and Teams, and Google Docs, Sheets and Gmail—which they can use to lure business customers and pair with their own cloud infrastructure.

AWS offers basic services to store, manage and process data, but it hasn’t succeeded much with applications higher up the cloud value chain that non-engineers can use. The lower-level, basic-infrastructure parts of the cloud will likely be commoditized in time, so AWS needs more higher-level services to keep cloud profits up, analysts said. It offers a videoconferencing app called Chime, for example, although it hasn’t gained much market share.

“Amazon has always had a void in the application space as a whole,” said Sid Nag, vice president at Gartner.

AWS needs to pivot to new and sophisticated tools to make the cloud more powerful for different types of businesses and easier to use, said Matt McIlwain, managing director at Seattle-based venture-capital firm Madrona Venture Group, an early investor in Amazon.

“If AWS doesn’t move up the stack and simplify it, they’re going to be outmaneuvered by somebody,” he said.

Amazon, known for its Spheres in Seattle, is working to maintain its lead in the cloud.

The Covid-19 pandemic has accelerated demand as companies use the cloud to connect with remote workforces and customers. Total cloud spending, including from infrastructure services as well as applications such as videoconferencing and customer-management tools, will grow from $706.6 billion in 2021 to $1.3 trillion by 2025, estimates research firm International Data Corp.

Mr. Selipsky said he is striving to make AWS more accessible to employees inside organizations who aren’t software engineers. He said AWS already has some early success here. One example is Amazon Connect, a cloud-based contact-center system that lets customers such as Barclays PLC shift thousands of its contact-center workers to working from home.

AWS is also rolling out tools designed for specific industries such as financial services, automotive, telecom and media.

Amazon isn’t likely to take on areas where Microsoft dominates, such as workplace collaboration tools, according to industry executives. Instead, it will be looking at new application areas to address in markets that are new to the cloud, such as 5G telecommunications infrastructure and connected vehicles.

Amazon is also developing its own faster and cheaper processing chips designed specifically for its cloud infrastructure. The company is working more closely with partners to deliver more types of software, said Mr. Selipsky. “We don’t believe we have to do it all alone,” he said.

At AWS’s annual cloud conference in Las Vegas starting later this month, the company will launch more of these higher-level services that Mr. Selipsky has hinted at, a person familiar with the company’s plans said.

“I think it’s really important that we remember that we’re still at the very beginning of the journey,” the person said.

Write to Aaron Tilley at aaron.tilley@wsj.com