- Amazon Web Services (AWS) offers an intuitively easy User Interface, flexibility, affordability along with more features. But this isn’t enough to prevent its customer to use the competitor Microsoft Azure (or even Google Cloud) as a secondary cloud provider (as backup). This circumstance allows customers to migrate completely to AWS rivals.
- Amazon is busy building economies of scope as a competitive advantage like its acquisition of Medical One, a telecare company, instead of creating or strengthening its cloud ecosystem.
- In the long run, we believe the market share of AWS could be slightly eroded gradually by more intense competition due to a lack of switching costs. We think Amazon should take care of this issue seriously, especially when the cloud is its most prolific segment.
In This Issue
- Competitive Advantage UX of Amazon
- Competitive Disadvantage UX of Amazon.
- In The Same Coin: Opportunity and Threat
- Final Word.
The Language as Switching Barrier
The AWS strength in Competitive Analysis of Amazon
Marketing Strategy of Amazon Web Services
Jeff Bezos begins his billionaire journey from a small garage in his home. From the beginning, he knows for sure what the word ‘start up’ is. So does his AWS. The cloud solution target market is a small business that Amazon sells directly to the IT person. This kind of marketing gives a lead to Amazon in the cloud race. Small business – start-up, something that the big old Dinosaur like Microsoft can’t do.
And this gives Amazon a lead.
AWS launched in 2006, leaving Microsoft – a company associated with innovation – in the dust. Azure itself just launched in 2010. And that 4 years interval makes a big difference. AWS enjoys its status as the prime mover advantage. In detail, since it gains more customers first, the IT user writes the code in AWS language, creating a barrier for another ‘language’ like Azure.
The User Experience: The UX
Moreover, AWS – as you expected from small business owners – is easy to use, intuitive, and cost-efficient: it pays what you need services. It differs from Azure that more complex and integrated with other Microsoft services.
Simply said, AWS is near perfect cloud solution.
The Hole of Perfect Business
The Weakness of AWS in Competitive Analysis of Amazon
Competitive advantage UX of AWS still leaves the gap
In some cases, the company requires additional backup for its application. For instance, a sneaker manufacturer needs to back up its inventory apps that already run in AWS. In this case, it could use Azure or a vendor like Google cloud.
This situation creates some gaps to be exploited by competitors, especially Microsoft which has a solid ecosystem including Windows, and Active Directory. In some situations, the Microsoft solution is more feasible due to its Office – windows integration.
However, we believe that AWS could retain its leadership in small businesses. On the other hand, Microsoft will pocket the enterprise.
Amazon’s business plan does not enhance the AWS
Like another big tech, Amazon is also hungry for new growth. The problem is it does not have a decent plan to reinforce its cloud business. The three largest Amazon acquisition is MGM studios, Whole Foods, and One Medical. That three are a strategy for the diversification of Amazon products and services. Not integrate all of its business.
MGM is a maker of James Bond. Amazon needs it to gain a foothold in the streaming business. Whole Food acquisition is to serve as an Amazon facility while One Medical is to expand in the healthcare business. None of these acquisitions give any support to AWS.
We don’t say that this strategy is terrible, sometimes company the size of Amazon simply can’t rely on organic growth. It requires something outside. But with the possibility of competitors like Microsoft taking your market share, you need to do more than this.
Amazon’s business plan is to make AWS a server for Amazon’s business.
In the early days, AWS was created to support Amazon e-commerce. And maybe, in the end, it will be the final plan for AWS. With Twitch, MGM, One Medical, and of course e-commerce in hand, Amazon could cut the cloud service cost by making it in-house.
Perhaps this is the vision of Amazon.
When The Opportunity also Poses a threat
Competitive analysis of Amazon need to consider when the cloud becomes bigger, the integrated service like Azure gain more advantage
When our shoe factory example gets bigger and has more branches, it may need a more complex application and a larger database. This is an opportunity for Amazon, but at the same time, it also opens a gap to be exploited by another vendor. Some companies may need more backup, as we have covered in the previous section.
Conclusion of Competitive analysis of Amazon
Amazon’s strategy is to diversify not to create a complex ecosystem. Its focus on Prime subscriptions could be boosted by its several expensive acquisitions. AWS is a good product, but it lacks factors that can lock the customer.
This post is best accompanied by our article that covers the competitive advantage of Amazon’s eCommerce business.