Amazon CEO Jeff Bezos is handing over the reins to Andrew Jassy, CEO of Amazon Web Services (AWS), as he transitions to the role of executive chair in the third quarter of this year. According to multiple media reports, Jassy has been with the company since 1997 and was the brainchild of AWS which was launched in 2006.
In an email to employees, Bezos said he intends to focus his energies and attention on new products and early initiatives. "As executive chairman, I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions," he added in the email.
The leadership transition was announced alongside Amazon's fourth quarter results, which saw a 44% revenue increase to US$125.6 billion, compared with US$87.4 billion during the same period in 2019. Amazon's revenue for the year increased by 38% to US$386.1 billion, compared with $280.5 billion in 2019. Meanwhile, AWS reported a 28% revenue growth during the fourth quarter.
Since the start of the COVID-19 pandemic, Amazon has incurred more than US$5 billion in operational costs on behalf of independent businesses selling in Amazon’s store, and expects to invest billions more through 2021. Closer to home, the company recently partnered with Enterprise Singapore to help local retailers scale globally. Under the partnership, Enterprise Singapore will support these efforts through the Market Readiness Assistance scheme, which includes support for up to 70% of eligible costs for overseas promotion, overseas business development and overseas country set-up. Support will be capped at SG$100,000 per new country. It also offered a one-time SG$2,500 automatic cash payout as part of the Digital Resilience Bonus administered by Singapore's Infocomm Media Development Authority last year.
Meanwhile during the quarter, AWS entered into agreements with companies from a wide range of industries, including JPMorgan Chase, Standard Chartered Bank, Thomson Reuters, The BMW Grouup, and Star Alliance, among others. It also expanded its infrastructure footprint worldwide, including the AWS Asia Pacific (Hyderabad) region, available by mid-2022, and the AWS Europe (Zurich) Region and AWS Asia Pacific (Melbourne) regions, available in the second half of 2022.
With Jassy as CEO, Lau Kong Cheen, senior lecturer, marketing programme at Singapore University of Social Sciences, said he will leverage the potential of AWS to drive stronger growth in the eCommerce and cloud services market. "Jassy will likely reinforce and expand the digital ecosystem that he has created with AWS and use it drive Amazon’s online strategy. While the key focus will still be on Amazon eCommerce, I think that Jassy will accelerate the growth of AWS to build more elements in the digital ecosystem to drive the business," he explained, adding:
We will likely see Amazon rise a few steps up leveraging on data, analytics and AI to drive its business and its partners.
Additionally, Lau said Jassy will strengthen the cloud computing services and use that as the backbone of the business to "keep its eCommerce partners captive", and sell digital services such Amazon's Prime movie content, and digital services, among others.
"His leadership will make Amazon a technology driven company, comparable with tech giants such as Microsoft, Google, and Oracle. Given this charismatic personality, he will continue to bring Amazon into the media lime light," Lau said.
Agreeing with Lau is Forrester's VP Allen Bonde, who said Jassy taking over signals the importance of not only AWS as the profit driver for its parent, but also the role of cloud tech that is the and will drive the growth of Amazon as a digital platform business going forward.
"While consumer eCommerce is a big market, B2B is an even bigger prize. Picking a leader who is driving their main enterprise offering may indicate the future of Amazon is in fact selling more to businesses, than consumers. In general, a much bigger prize in the long run," he added.
Becoming a next generation eCommerce platform
The most important strategic shift that Jassy could bring for the core business of Amazon is to take it to a next generation eCommerce platform, Prashant Kumar, founder and senior partner at Entropia said. While it has expertise in AI, eCommerce is beyond that, comprising extended reality commerce, high-context virtual sales environments, content-led commerce, and hybrid commerce that overlays augmented experiences in physical environments. At the same time, conversational and key opinion leader commerce via WeChat-like apps have also become popular in China. "Amazon as a leader needs to reconceive that future before anyone else does," he said.
Nonetheless, the leadership transition is "a welcome change", said Kumar, who added that Jassy's appointment highlights Amazon's commitment to true professional corporate governance beyond a founder persona. Additionally, he explained is also a recognition of the fact that Amazon needs "a fresh white sheet perspective", building upon the essence of what makes it great, yet exploring new degrees of freedom and opportunity in where the next twenty years lie.
"In any case, Bezos, despite being an unquestionable icon of the digital age in the league of Jobs and the Google duo, was pretty low profile if you compare him to Tesla's Elon Musk or Facebook's Mark Zuckerberg. So this is going to be relatively easy," Kumar explained.
Despite Amazon's impressive revenue last quarter, Kumar said when looking at market value to revenue ratios of Silicon Valley greats, "Amazon’s relative weakness has been its margins say versus an Apple". Now that both model and scale are both well-established, it is time for Amazon to ramp up gains in margins by maximising all sorts of synergies, assets and competencies. AWS’ success under Jassy may be one clue to where that could come from.
According to Kumar, the future belongs to the cloud and COVID-19 has accelerated that process. "It is a perfect time for Amazon to extend its leadership in the space to the next level especially to deliver the Industry 4.0 technologies such as AI, 5G and Internet of Things against intensifying competition," he explained.
Given Jassy's experience with AWS, it would come as no surprise should Amazon expand into more business-oriented services as well as continued investment into advertising, Prophet's senior partner Jay Milliken said given Jassy's experience with AWS. The more interesting news, according to him, would be Bezos's next move.
"We know that he has a passion for space travel with his Blue Origin company, so will he focus more time on that company, will he get involved in some other early stage tech companies (like Elon Musk), will he devote more time to philanthropic pursuits (like Bill and Melinda Gates) or will he do something completely different and surprise us?" Miliken said.
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