Amazon’s first-quarter earnings report April 26 was really a progress report on the company’s ambitions to build a super platform that combines the power and reach of Amazon Web Services (AWS) and the Alexa voice assistant. And the progress is good. Very good.
With Amazon posting net sales increasing 43% to $51.0 billion in first quarter 2018, compared with $35.7 billion in first quarter 2017, the only potential complaint analysts were able to muster is that this type of amazing growth cannot last forever.
As we have discussed on our blog, Amazon has been rapidly creating an intelligent and continuously evolving super platform for launching lovable products built upon Alexa and delivered across the cloud (via AWS). The super platform has made it possible for Amazon to develop products such as the Echo line of smart speakers and then distribute those products rapidly. And look at the results:
- The Echo commands 70 percent of the market share for smart speakers just four years after its launch
- Amazon has developed Alexa-based interfaces for products that extend well beyond our living rooms and into our kitchens, bathroom, and automobiles
- Alexa is now becoming a bigger part of the workplace with the launch of Alexa for Business
Based on Amazon’s quarterly earnings announcement, the super platform is achieving Avengers-like super powers. Not only did Amazon beat Wall Street’s predictions for revenue and earnings growth, but AWS sales grew 49 percent year over year, generating $1.4 billion in operating income, or 73 percent of Amazon’s total operating income.
In a statement, CEO Jeff Bezos said, “AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down. As a result, the AWS services are by far the most evolved and most functionality-rich.”
Meanwhile, Amazon noted that its growth was buoyed by a slew of Alexa-powered products. In fact, its quarterly announcement mentioned Alexa 26 times. For instance, Amazon launched Blueprints for consumers to program their own Alexa skills; Alexa Calling and Messaging on Fire, iOS, and Android tablets, which gives people more ways to communicate with Alexa.
AWS cannot rest on its laurels. As CNBC noted, Microsoft’s and Google’s own cloud-based services are growing faster than AWS is, with Microsoft’s Azure cloud growing 93 percent in the first quarter. And although Alexa is the most popular voice assistant, Apple, Google, and Microsoft will continue to develop their own voice assistants to keep pace.
But Amazon has developed the platform of choice for voice-based experiences that power how we live. And Amazon’s quarterly results provide proof that its bold, long-term strategy of plowing revenue back into the company for years is paying off in a big way.