Amazon's MalAIse
Annie Palmer
While we can argue about whether or not Apple being "late" to AI may actually be a good thing in some ways, for Amazon, it is clearly a problem. Because for them, Alexa and the seemingly silly Rufus shopping dog bot aside, the mere perception of being behind in AI may be hurting AWS, where clients pay real money for the cloud they deem to have the most boxes checked:
The problem for Selipsky and the challenge for Garman is that Amazon has yet to emerge as a leader in generative AI despite throwing billions of dollars behind OpenAI competitor Anthropic and rolling out its own large language models, or LLMs. In the developer universe and among startups, the company is battling the perception that it’s falling behind cloud rivals Microsoft and Google, in addition to lagging OpenAI in developing AI tools.
After years of rapid expansion, growth at AWS decelerated to 13% in 2023, down from 37% in 2021 and 29% in 2022, reflecting more conservative spending by businesses on IT and cloud services. Amazon has downsized across the board, including at least two rounds of layoffs at AWS since last year.
AWS market share is at 31% and falling while Microsoft is all the way up to 25% and rising, according to Canalys. So yeah, that's a problem. And it should be no surprise that a change at the top of AWS is happening.
A source close to Amazon, who asked not to be named because they weren’t authorized to speak on the matter, described Garman to CNBC as a “wartime” leader and said change was needed to get more aggressive in AI.
Amazon won the first battle in the cloud war, but AI is looking like a new battle.
During a Q&A session on Wednesday, Jassy was asked twice about the status of Amazon’s generative AI efforts. He said the company is “seeing a lot of momentum” in generative AI within AWS to where it’s now a multibillion-dollar business based on annualized revenue.
He reminded shareholders that Amazon owns Alexa, which was a popular consumer offering long before the latest chatbots hit the market.
“If you don’t believe there’s going to be a really broad personal assistant, you have your head in the sand,” Jassy said, adding that the company is building a “much more expansive” AI model to power Alexa. Amazon has previously said it intends to use generative AI to make Alexa more conversational. CNBC reported on Wednesday that Amazon plans to charge a subscription fee for the more powerful version.
To me, pointing out that Amazon owns Alexa here points to the opposite of what Jassy was intending. Yes, so you'd think Amazon would be miles ahead in at last chatbots, if not AI in general thanks to having their devices in tens of millions of homes for years now. Instead, again, they're viewed as behind in both spaces now.
And it's great that Alexa is getting revamped. That should have happened at least two years ago, if not sooner to get ahead of the ChatGPT revolution. That also feels similar to Apple's story with Siri. Yes, they were first to market. Only to get trounced by Alexa. And only for both now to get eaten alive by this new wave of AI.
Yes, it's early days, and it's all still moving so fast that perhaps there are advantages to sitting around and waiting for it to shake out a bit – unless you're a company that was in the pole position in the space. Then you'll simply be viewed a company which blew the lead it had.
Update May 30, 2024: Just in case you needed more proof of Amazon needing some help with AI...
M.G. Siegler