Being Amazon must be great.
They’re a company that has seemed to keep a steady hold on the pulse of the American economy for years now. They know what consumers want, not just now, but in the future – and they plan out their operations accordingly.
Sure, they’re the undisputed kingpin of the online retail industry. But mastering e-commerce isn’t enough. Jeff Bezos’s company also owns Twitch and has compiled an expansive media library with Amazon Prime audio, video, and books.
There’s the successful line of home media devices, like the Amazon Echo, as well as the chain’s own custom line of products known as Amazon Basics. But what’s the next step?
Going by what they’ve already done, it would seem the next piece of the puzzle involves appealing to businesses with their bustling cloud services.
The cloud is becoming increasingly crucial to a smart workflow, as more businesses are going partly or entirely digital, with nearly all businesses operating between locations or at the very least between devices. Being able to rely on a safe and responsive cloud service gives companies an advantage, regardless of their industry or size.
Going by the news Amazon has given about their service in this area, it suggests a larger number of upfront commitments are coming in. This means customers are confident, and the company is ready to continue showing their mastery of the market.
The news broke at Amazon Web Services’ annual re:Invent conference. Partner deals like the ones talked about here are typically largescale, multi-year commitments. Showcasing the confidence that comes with big deals, the representatives noted that there is a higher likelihood that customers who set up these types of commitments will follow all the way through.
Jeffries analyst Brent Thrill said: “It suggests customers are doing ‘cannonballs’ into the pool versus just dipping their toe in. Bigger commitments mean we have more confidence in revenue as most customers won’t leave AWS once they commit.”
When they began disclosing performance obligations earlier this year, Amazon defined them as future revenue. This means the last quarter their numbers jumped from $16 billion to $17.8 billion. But while this means that Amazon’s cloud service is riding high, what exactly does it mean for the cloud market in general?
Much of the business that cloud companies do comes from large companies – it’s simply easier to get big money from customers that may need larger service packages and more add-ons than the average consumer. And if so many of these big customers are saddling up with Amazon now, there is a likelihood that future competitors have already missed out on them for years to come.
If they work with Amazon through the duration of their current commitments, they will likely get used to them, which could also mean they’ll renew and continue to be loyal customers in the future.
If Amazon’s success in other areas is any indicator, this means they could continue their success here and sweep most of the market with ease.