Amazon’s next pillar is AI

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Seattle-based Amazon is doubling down on AI for AWS and the ecosystem around its AI assistant, Alexa. It’s seeking to become the central provider for AI-as-a-service. But it’s not leaving retail behind either, running grocery, book, and convenience stores across the US.

Key takeaways

Given Amazon’s enormous breadth, we won’t be covering every aspect of its business. But highlights from our analysis include:

Amazon is growing more acquisitive. Amazon acquired 10 startups in 2017 – more than any other year on record. In addition to its purchase of Whole Foods, the company bought Harvest.ai, a cybersecurity player, GameSparks, a game development platform, and Blink, a developer of home security cameras, while also expanding geographically with its acquisition of Souq.com, a Middle Eastern e-commerce site.

Amazon’s next pillar is AI. Voice, virtual assistants, and natural language processing will continue to be a focus for Amazon. But the company is also focused on AI-as-a-service, putting the basic tools of AI in the hands of its cloud computing and developer community. More than ever before, Amazon is aspiring to become a platform company.

Amazon is going after healthcare. Its investment into cancer detection company GRAIL was a vote of confidence in genomics, which with its massive data and processing needs, will be a major area for computing. In addition, Amazon’s recent partnership with JP Morgan and Berkshire Hathaway to provide employees with better health insurance signals broader ambitions to upend traditional healthcare.

Amazon is proactively creating a valuable ecosystem around its Alexa voice computing platform. Currently, the Alexa platform offers software development kits (SDKs) that allow third-party developers to build skills for the AI assistant and other manufacturers of hardware to integrate the Alexa assistant into their products.

Lab126, Amazon’s secretive R&D lab, is behind the company’s recent consumer tech hits. Is this the new Bell Labs or Xerox PARC? The secretive Silicon Valley-based R&D lab is behind hardware hits like the Echo and Kindle. And although it was also where the ill-fated Fire phone was developed, the lab is an often under-appreciated example of Amazon’s internal dedication to innovation.

Amazon aims to grow market share in physical retail and CPG, as well as consumer goods in general. The company operates its own shoe line (The Fix) and apparel brands (Ella Moon, Good Threads, Paris Sunday) as well as consumer goods grouped under its AmazonBasics label.

Amazon has also begun opening brick & mortar bookstores and recently launched Amazon Go, its cashier-less convenience store, with plans to expand the stores nationwide.

Amazon’s search for its second US headquarters highlights the company’s economic muscle. Cities have aggressively competed to attract Amazon after the company announced a search for a city with the talent and entrepreneurial streak to host its second US headquarters.

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