Amazon : Appetite To Grow

Now an average consumer in India knows about online selling platform Amazon.com as Apni Dukan, it has spread its wings in all geographical locations across the globe. From an online book store only 20 years back to a US$ 480 Billion worth company.

It was on May 15, 1997, a money-losing and non descriptive online bookstore went public on the Nasdaq in an IPO that valued it at a modest $438 million. Twenty years later, that little startup have spread wings, diversify into online selling platform, cloud and other tech services provider, gadgets, newspaper, grocery store chain, space research and its appetite to grow is bigger, bigger and bigger.

To get there, the Seattle USA-based giant has pumped nearly all of the cash it generates into huge new investment areas, like Amazon Prime, Amazon Web Services and, most recently, the Alexa voice computing platform. With a focus on growth over net income, Jeff Bezos’s baby has penetrated industry after industry at a pace perhaps unmatched in modern history.Bloomberg's Devin Leonard says that Amazon's annual revenue in 2010 was $34 billion. As of last year, that grew to $107 billion. The number of employees has also grown tremendously from 33,700 workers in 2010 to 268,900 as of June and now 371,000 and still adding more.

Gene Munster, an internet industry analyst at Piper Jaffray, estimated that Amazon is expected to sell 7.2 billion items this year. By 2020, that number is expected to grow to 12.6 billion items.But getting that kind of growth isn't cheap, and involves heavy investment in transportation. Amazon spent $11.5 billion on shipping last year - that's twice what the company spent two years ago.


In 2008, Amazon leased more than 20 jets from Atlas Air. In March, the company leased 20 Boeing 767s from cargo company Air Transport Services Group. The company has also acquired 4,000 truck trailers, and opened more than 28 sorting centers and 59 delivery stations.

Amazon has also dipped into actual ships. The company's subsidiary in China has obtained a license that allows Amazon to sell space on container ships traveling between Asia and the US and Europe. Deutsche Bank released a report in June predicting that Amazon will have a shipping operation that consists of self-driving trucks and drones in addition to the 767s and container ships.

In fact, some are even predicting that Amazon will turn its investment in shipping into a whole new business, challenging companies like FedEx with its logistics supply chain.

John Rossman, a former Amazon executive, says that while this won't happen in the next five years, he definitely sees it as a possibility in the next 10 to 15 years.

Amazon isn't just going after retailers and grocery stores. It's capturing a bigger share of the business supplies space as well.

Amazon Business, a business marketplace launched in 2015, now has over one million customers, more than tripling in size from last May, Amazon announced Tuesday. It also said there are more than 85,000 sellers on its platform, up from the 30,000 it had last year.

Amazon Business also offers other services like business analytics and loans to its sellers. The marketplace is available currently in the US, UK, and Germany.


The growth in Amazon Business, which sells everything from industrial supplies like screws and pumps to lab and medical equipment, reflects the e-commerce giant's continued expansion. As Amazon looks for the "fourth pillar" of its business — to go alongside the e-commerce marketplace, Amazon Prime and Amazon Web Services — some investors believe Amazon Business could be that next growth driver.

In a report last year, RBC Capital observed that the Business Supplies total addressable market is attractive ($5 trillion) and Amazon's offering is unique and leverages Amazon's core competencies. We believe Amazon Business has significant potential to be Amazon's Fourth Pillar.

Besides the numbers of sellers and buyers, Amazon didn't share much data around Amazon Business's growth. Last year, Amazon Business disclosed that it saw over $1 billion in sales in its first year of launch.

Still, investors are keeping a close eye on Amazon's move into the business supplies space. Earlier this month, Susquehanna lowered its price target for Grainer, the industrial parts seller, citing "heightened anxiety about the potential negative impacts of rising online competition from Amazon and other players." Grainger stock is down 24% over the past year.

Last week,  Amazon released a “haul” of Echo/Alexa products. Nearly three years after the release of the original Echo. In 2014, the original Echo was treated to yawns and “What the heck is it? A speaker you talk to?” comments by even some of the most astute in technology. Echo rapidly gained wide acceptance outside of the centers of technology, and by 2016 some tech observers were declaring Echo an “overnight success”.

Amazon surprised just about everyone in technology when the secret "Project Doppler” or "Project D" from Lab126 offices in Silicon Valley and Cambridge, Mass. was announced on November 6, 2014. This was an outgrowth of a Kindle e-book reader project that began in 2010 and the acquisition of voice platforms it acquired from Yap, Evi, and IVONA.


A whole lot of work went into what we see as Echo today. The ambitions rose fast as the "Project Doppler” teams saw that the timing was right for a convergence of voice recognition, intent extraction, voice synthesis, far-field microphone arrays, AI systems and cloud computing. Just one year ago Jeff Bezos' had 1,000 person Alexa army and people were stunned . Today it is a 5,000+ person Alexa army.

This was a next generation Amazon Alexa-themed event with Echo devices for every possible use case. The company showcased new or improved devices :

Echo Spot— is a circular-screened device that is an Echo Show fitted into a circular 2.5-inch display "alarm clock". It includes the second generation far-field microphone array with higher accuracy at a distance. There is a connection to external speakers via Bluetooth or a 3.5mm audio cable to bolster the 2W built-in speaker. The Spot is available to pre-order now, and will ship to the US in December for $129 .

New Echo— is shorter than the original and features a variety of shells to match the room you place it in and costs less than the Echo did at launch, $99 and is available today [3]. This is the sequel to the Echo and retains the name of the original Echo related in 2014. This is a high fidelity Echo with a 2.5-inch woofer and a dedicated tweeter with Dolby Digital audio. The new Echo uses the new far-field microphone array. Amazon revealed six sleeves that fit around the new Echo including fabric and wood veneer to suit any room in your home.

Echo Plus— is an easy-to-setup smart home hub in the same form factor as the original Echo in three new colors, selling at $149 and available today [4]. Out of the box smart bulbs will automatically go into discovery mode while you install them. Alexa will automatically name the devices with a simple naming convention: the first one you set up will be called "first light” that can later be changed to something more meaningful. There are no apps or skills needed to install on the device, it just works with 100 devices available at launch for the Echo Plus including lights controllers, switches, light bulbs, cameras, drapery controllers and locks. The Echo Plus ships with a Philips Hue smart bulb so customers can test the idea of a smart home system before they buy any other gear.

Echo Connect— is s phone device that plugs into the standard RJ11c home landline phone connection and lets US customers make phone calls through their Echo speakers on sale now for $39 . The call is tied to the owner’s phone number, so receivers will still see the same number and caller ID of who is calling them. This makes this new Echo Connect a sort of extension to a landline speaker phone. There are 50.5% of US households now that only have only wireless phones, yet the others still use land lines often. This of course is primarily a focus of an older are cohort. Yet this is a very powerful feature that moves Amazon is a much wider use case. The device will also allow you to call 911 for emergencies.

Fire TV featuring 4K Ultra HD—HDR and Alexa Voice Remote— is 40% percent more powerful than the Fire TV Stick. It is the next generation of Amazon Fire TV and works seamlessly with 4K Ultra HD or HDR compatible TVs with a true-to-life picture quality and sound with vivid colors, 60 fps, HDR, and Dolby Atmos audio, on sale now for $69.99 . This is the Alexa TV interface with a powerful near-field microphone array.

Echo Buttons— is a new way to interact with Echo/Alexa. This is a bluetooth connected, multi hued, LED lit button that can control the functionality of Alexa . This looks a lot alike a Staples “Easy” button, but it is something much more. The buttons can be assigned uses by each Skill based on the Alexa Gadget software tools that Skills can access. The physical modality of a remote button leads itself to new use cases. The first use case will be gaming as displayed in the Amazon example images, however I can see dozens of new use cases that will plant these $20 for 2 devices product in many areas.

The Echo Family

The array of Echo devices and the speed at how they are entering the market is almost impossible to keep up with. There are 100s that span from appliances to automobiles. Amazon’s own device line up has grown by four devices in one year. This is a massive move for what some though of as just a niche market.

Today, with the Echo Plus, Amazon has also solved the frustrating setup of smart home devices with a 1-click, no-smartphone-needed step. This means a smart lightbulb is instantly recognized the moment it is turned on. This establishes the Echo Plus as the new high watermark standard for home automation. Just this alone would be a big deal today, but there is much more.

Alexa Taking Over Every Room Of The House And...

Most of the Echo devices are in the Kitchen, Great Room or living room. In many homes this is really part or directly connected together. This forms the nucleus of the typical home. The path in was unobtrusive and almost unnoticed, viewed as a novelty by most . Yet this route, planned or unplanned is very much a part of the reason that Amazon has taken the Voice First sector and defined it. This was a space for other companies to lose in, namely Apple and Google and they were utterly caught by surprise. Even today it may not seem apparent just how important this is and will become.

With competition hotting up, the Voice First revolution the rise of Voice mediated AI as an inevitability. User interfaces shift forward about every ten years  and we see it as the next interface.

This shift means that on the arc of ten years we will become more acclimated to Voice First and those that have defined it may very well have the advantage and Amazon is not going to let this advantage slip.

There is also another quite unnoticed aspect at play. Humans form concentric ad-hoc social networks. The very first concentric ring in this network is those we love. This is precisely the social network that Amazon is building around. I see the Echo Show and the new Echo Spot as the fabric that weaves into this social network in a way that is quite powerful. The “appliance” nature of the new Echo Spot goes way beyond the Alarm Clock use case. I see it as ultimately a $50 item that will connect those we love, wives, husbands, children, grand children, girlfriends, boyfriends or just about anyone we love on a close level. The zero-barrier ability to set up a quick video call is the delivered promise from the early 20th century Science Fiction novels to World’s Fair demonstrations by Bell Laboratories. Of course all of the pieces of this social network have been in place with Skype and Face Time, yet not quite like this. I see a future version of Echo Spot on the desk of just about anyone. On the kitchen table. Indeed, next to the bed. Connecting us, when it is ok with us, to each other. This is very firm glue and Amazon currently owns this space also.

The Echo Spot is today’s standout because it captures the right balance of visual use and Voice First use in an unobtrusive and stunningly beautiful design. The circular front screen is great design and will ultimately lend itself for the Echo Watch. There is no doubt in my mind that Echo Watch will be a high point of 2018 along with Echo Glasses, perhaps paired together as a single system.

We can already see how the Echo Spot is telegraphing the future and this is fundamentally important. The Echo Spot defines a new device category that is not quite Echo and not quite Echo Show. The only hold up is the price point should be lower objectively for the mass market I see ahead. The sweet spot price for the Echo Spot should be $59 and I think we may see that as soon as 2018.

The Echo Spot along with the Echo Watch and Echo Glasses will move Amazon from the home and into other spaces. There is no doubt that the automobile is on the road map with the BMW partnership announced recently. We will see the Echo Spot showing up in businesses first as employees take it in sitting next to the pictures of loved ones. And later, as a modality for customers to communicate with businesses. This will be a rather large turning point. I see a big business to consumer use case on the horizon. Amazon’s AWS pedigree will assure this new way of connecting people works. It will extend the close social network to a new default communication channel.

Amazon operates on the Day 1 at Amazon always. Jeff Bezos stated:

'The outside world can push you into Day 2 if you won't or can't embrace powerful trends quickly. If you fight them, you're probably fighting the future. Embrace them and you have a tailwind'

What Jeff means is this, they are always trying to embrace the Day Spirit and ethos. The Voice First revolution is the tailwind that was formed from millions of years of evolution creating our primary communication channel, our voice, to the convergence of just the right hardware and AI software along with cloud computing to make the powerful trend surface. Amazon did not invent the concept of the Voice First device, but they sure are defining it now and into the future. History will wonder why it was not so obvious by those that had much to lose. Perhaps the drive created by the Day 1 spirit gave Amazon the advantage, and now with the tailwind, they are relentless in determination.