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Sep 21, 2018

Amazon Extends Its Platform Mentality Even Further Into Devices

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Yesterday Amazon unleashed a tidal wave of new products, from clocks and microwaves, to an in-car Echo, and a bevy of music devices. But what is most interesting is likely not the overwhelming quantity or specifics of every item, but the clear path Amazon continues to take in both owning and partnering within its ecosystems.

To be clear, this is a very un-retail like approach; few retailers are willing to invite competitors onto their platforms and traditional retailers like to be in control of the what, how, where of anything sold under their banners. Most retailers have a thinly veiled adversarial relationship with their suppliers (and first party Amazon retail is certainly no exception to this), competing with them when it is good for the retailer (private label) and trusting them to provide value when it is clear that the retailer can’t (branded products). But Amazon’s strategy is much less about competition and much more about cooptition, that curious concept of competing and cooperating at the same time.

But cooptition, while not in any retailers DNA, is embedded at Amazon where the concept of a big tent platform is deeply ingrained. It starts from the whole concept of marketplace (inviting other retailers onto your platform, allowing them to sell the same devices you do, even sometimes at lower prices), which is about as radical a notion as any retailer has ever had. It extends to Amazon Web Services powering Netflix, and who knows what else. And all this cooptition is in the name of scale. Amazon is looking for scale in all areas, and oftentimes it can’t get that scale by itself and is willing to create the entrance to its platform to enable this.

This brings us back to today’s event... certainly, like any good retailer, Amazon wants to dominate the product categories it competes in, and it’s even better if it dominates those categories with its own products. But as omnipresent as Amazon and the Echo family of products are, it has made equal strides in trying to enable an Alexa ecosystem that extends far beyond what is capable individually. Amazon recently announced that Alexa is enabled on 20,000 devices, up from just 4,000 earlier in the year. And today they began to talk more about enabling their partners just as much as they enable Echo branded devices. Products and services like, Alexa Presentation Language, opening up APIs, such as enabling Skype on a Show, or Waze on an Echo Auto device; and Alexa Connect, which can enable pretty much anything to be Alexa-fied and allows brands to concentrate on great devices, while AWS does all the back end heavy lifting – are just two examples.

Today was definitely about Echo as a brand, but it was also about Alexa as another ecosystem built by Amazon and open to drive scale, leverage, and force other brands (by the power of numbers) to work inside it. The ultimate scale benefit will go to Amazon and the furthering of its advantage over competitors, like Google and Apple. It’s a powerful reminder about the strength of platforms for software, but also for hardware.

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