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Amazon Strategy: Building New Business Pillars In AI

Amazon is the exception to nearly every rule in business. Rising from humble beginnings as a Seattle-based internet bookstore, Amazon has grown into a propulsive force in at least five different giant industries: retail, logistics, consumer technology, cloud computing, and most recently, media and entertainment. The company has had its share of missteps — the expensive Fire phone flop comes to mind — but is also rightly known for strokes of strategic genius that have put it ahead of competitors in promising new industries.

This was the case with the launch of cloud business AWS in the mid-2000s, and more recently the surprising consumer hit in the Echo device and its Alexa AI assistant. Today’s Amazon is far more than just an “everything store,” it’s a leader in consumer-facing AI and enterprise cloud services. And its insatiable appetite for new markets mean competitors must always be on guard against its next moves.

As the biggest online retailer in America, the company accounts for 5% of all retail spending in America, and the company has been publicly traded for two decades. While its market capitalization has swelled recently, so too have expectations. Wall Street banks like Morgan Stanley expect Amazon to continue growing at a rate that no company its size has ever done before: 16% average compound growth in sales through 2025. If Amazon were able to satisfy the lofty goals, it would be “the most aggressive expansion of a giant company in the history of modern business.”

Understanding the many-headed beast that is Amazon is no easy feat, especially because Amazon is far less transparent than its peers. As the Times has written, “It isn’t just secretive, the way Apple is, but in a deeper sense, Jeff Bezos’ e-commerce and cloud-storage giant is opaque. Amazon rarely explains either its near-term tactical aims or its long-term strategic vision. It values surprise.”

By all accounts, Amazon is just getting started in newer initiatives like cloud services, artificial intelligence, and logistics. Given Amazon’s enormous breadth, we won’t be covering every aspect of its business. But some of the main takeaways from our analysis include:

  • Amazon’s latest raft of acquisitions could indicate more hunger: Amazon had a large uptick in M&A in Q1’17, buying Harvest.ai, a cybersecurity player; Do.com, a meeting productivity software; while also buying its way into a new geography with Souq.com, a Middle Eastern e-commerce site. This is out-of-character behavior given the company’s generally more conservative M&A history and could mean Amazon is shifting to a more proactive stance to fuel its AI and enterprise ambitions.

Read the source article at CBInsights.com.

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